Good morning. Happy Friday.
The Asian/Pacific markets leaned to the upside, but movement was minimal. South Korea and Malaysia did well; China and Australia were weak. Europe, Africa and the Middle East are currently mostly down. Turkey and Greece are doing well, but the UK, Poland, France, Germany, Finland, Norway, Spain, the Netherlands, Italy, Portugal, Austria, Sweden and the Czech Republic are down. Futures in the States point towards a moderate gap down open for the cash market.
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The dollar is up. Oil is flat; copper is down. Gold is up; silver is flat. Bonds are up.
Stories/News from Seeking Alpha…
Prepare for a no-deal Brexit
“There is now a strong possibility that we will have a solution that is more like an Australian relationship with the EU,” Boris Johnson said in his first remarks since a crunch meeting in Brussels, suggesting a no-deal Brexit may be in the cards. What does that look like? Canberra largely does business with the EU based on World Trade Organization rules, and has few other arrangements in place, such as cooperation on science and trade in wine. With negotiations between the U.K. and EU still hung up over fishing rights, a competitive playing field and enforcement, some “Plan B” details are surfacing in case an agreement doesn’t materialize before a weekend deadline. Shortly before Johnson’s announcement, the EU released its Brexit backup strategy, including a shortlist on ensuring basic reciprocal air and road connectivity, as well as the possibility of reciprocal fishing access. Slight caveat: Most of the contingency measures will need compliance from the U.K. side, and any plans from Britain will need the same.
Futures fall back
U.S. stock index futures have turned around over the last few hours, pointing to a 1% decline at the open, as sentiment followed European equities into the red amid talks about a disruptive Brexit. “We’ve been thinking for a long time that these comments are a negotiating tactic and that it is important for both sides to get a deal,” said Seema Shah, chief strategist at Principal Global Advisors. “But we’ve seen concerns starting to creep in this week that if the gap is too wide between the two sides then maybe it can’t be breached.” If an agreement can’t be struck this weekend, both sides are preparing for significant border disruption affecting trade worth close to $900B a year. U.S. coronavirus relief talks also faced fresh setbacks, with Senate Republicans suggesting they couldn’t accept some aspects of a $900B bipartisan proposal despite rising U.S. unemployment claims.
Red-hot IPO market
Airbnb (NASDAQ:ABNB) hosts from around the world rang their doorbells on Thursday to celebrate the company’s stock market debut, with shares of the home rental business more than doubling on their first day of trade. The stock opened at $146 apiece, which is more than double its elevated $68 IPO price. “I don’t know what else to say, I’m very humbled by it,” CEO Brian Chesky said in an interview, as investors jump back into fast-growing tech stocks and express exuberance for new listings. Hot money? The listing comes 24 hours after DoorDash (NYSE:DASH) soared in its public debut, while videogame company Roblox (RBLX) and the parent of online retailer Wish, ContextLogic (WISH), are also set to debut this month.
More content
The Mouse House wrapped up its Investor Day with a $1/month price bump (to $7.99/month) for Disney Plus and projecting 230M-260M subscribers by 2024 across all its streaming platforms. CEO Bob Chapek also revealed that Disney Plus currently has more than 86M subscribers (up 18% in the last month), sending the stock soaring 6.2% in AH trading, even as most of its theme parks remain closed due to COVID-19. Ring the register… The Kardashians are coming to Disney in 2021 on the entertainment giant’s Hulu and Star streaming subsidiaries, Christian Bale is joining the Marvel Cinematic Universe and 10 Star Wars series spinoff series were announced following the success of The Mandalorian.
Good news, bad news
A panel of outside advisers to the FDA voted 17-4 to endorse emergency use of Pfizer’s (NYSE:PFE) coronavirus vaccine, paving the way for the agency to approve the shot for a nation that has lost more than 285K lives to COVID-19. Meanwhile, Sanofi (NASDAQ:SNY) and GlaxoSmithKline (NYSE:GSK), two of the world’s biggest vaccine makers, have delayed advanced trials of their potential vaccine after it produced an “insufficient” response in older adults. They now say their jab won’t be ready until late next year, and will commence a new second-phase study with a more concentrated antigen in February. In another setback for vaccine developers, Australia canceled an order for 51M doses of a COVID shot being developed by CSL (OTCPK:CSLLY) and the University of Queensland. PFE +1.5%; SNY -3.5% premarket.
Flying taxis get a lift
It was only days ago that Uber (NYSE:UBER) agreed to sell its flying taxi unit to Joby Aviation, and now the Northern California startup is getting a boost from the U.S. military. The Air Force issued a first-of-its-kind safety endorsement to Joby’s electric vertical takeoff and landing (eVTOL) aircraft, laying the groundwork for eventual civilian certification of the technology and even approval of autonomous flights crossing American cities. “This is an exciting announcement because it means you are literally seeing a new market emerge,” said Will Roper, head of Air Force acquisitions. “Not just for military missions, but for all missions, including commercial ones. We are excited to see what’s to come for Joby and other companies pushing the boundaries of electric vertical takeoff and landing or flying cars.”
Payment processors halt payments
Mastercard (NYSE:MA) and Visa (NYSE:V) have stopped processing payments on Pornhub following a viral NYT column last week that reported many videos of child sexual abuse and nonconsensual violence. Pornhub called the actions “exceptionally disappointing” after it implemented safeguards such as a ban on video downloads, as well as permitting only certain partner accounts to upload content. “This news is crushing for the hundreds of thousands of models who rely on our platform for their livelihoods,” the Montreal-based company said in a statement, in which it denied the recent allegations. PayPal (NASDAQ:PYPL) has already suspended cooperation with the platform, while American Express (NYSE:AXP) has a longstanding policy that prohibits card acceptance on digital adult content websites.
What else is happening…
ECB boosts pandemic asset purchase program to €1.85T
Ferrari (NYSE:RACE) CEO retires after bout with COVID-19.
MetLife (NYSE:MET) offloads U.S. P&C business for almost $4B.
Latest SPAC merger: Online cannabis listing service Weedmaps.
Thursday’s Key Earnings
Adobe (NASDAQ:ADBE) -1.4% despite FQ4 beats, strong guidance.
Broadcom (NASDAQ:AVGO) -2.2% AH even as the chipmaker topped expectations.
Costco (NASDAQ:COST) +0.1% AH posting double-digit comparable sales.
Oracle (NYSE:ORCL) +0.2% AH following an upbeat forecast.
Today’s Economic Calendar
8:30 Producer Price Index
10:00 Consumer Sentiment
12:40 PM Fed’s Quarles Speech
1:00 PM Baker-Hughes Rig Count
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Good morning. Happy Thursday.
The Asian/Pacific markets closed mostly down. Hong Kong, South Korea, Taiwan, Australia and Singapore posted the biggest losses. Europe, Africa and the Middle East currently lean down. Turkey, Russia, Hungary and Portugal are up; Greece, Finland, Norway, Israel, Austria, Sweden and the Czech Republic are down. Futures in the States point towards a down open for the cash market.
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
IPO frenzy
DoorDash (NYSE:DASH) had a stellar day on the public market on Wednesday, with shares closing at $189, nearly 86% higher than its IPO price and giving the food delivery service a market value of nearly $60B. The performance is an indication that investors haven’t lost their appetite for fast-growing tech stocks, and is a good sign for Airbnb (ABNB), which debuts today on the Nasdaq. The home rental business priced its IPO at $68 per share, above its marketed range of $56-$60, valuing the company at $47B on a fully diluted basis. It comes after Airbnb turned a surprise $219M profit last quarter as people resumed traveling – but to different destinations (rentals surged in rural areas as cities faced lockdowns and extensive coronavirus restrictions).
Zuck empire is endangered
Facebook (NASDAQ:FB) got nailed with two lawsuits yesterday, one from the Federal Trade Commission and another from a group of 46 U.S. states, which both accused the company of abusing its monopoly power in social networking. The FTC suit focused on Facebook’s acquisition of Instagram in 2012 and WhatsApp two years later, describing the deals as a way to stifle competition, while state attorneys general said its actions were a “buy or bury” approach toward its rivals. Is a divestment in the cards? Facebook denied the anti-competive practices, calling it “revisionist history” of two major acquisitions the government had approved several years ago, but said it would review recent complaints and provide further updates shortly.
Mouse House Investor Day
The pandemic has knocked billions of dollars from Disney’s (NYSE:DIS) operating profit (think closed theaters and theme parks) and the company is facing some important strategic decisions with less cash to pad its mistakes. Its shift toward streaming is set to come up at today’s Investor Day and positivity is coming out of Wall Street ahead of the event. Among them: Wells Fargo upgraded the stock to Overweight, saying Disney is “set to complete its transformation into a global streaming content company” and pointed to deep brands from Disney+ to general entertainment (including Star and Hulu) and “eventually global sports” via ESPN Plus. Streaming has also helped Disney’s stock price stay stable, and even go up, because the market sees it as the future and a great platform for growth.
Pulling back from record highs
There’s not much movement from U.S. stock index futures after the Nasdaq snapped a four-day win streak with its biggest drop since October. Investors also lost some hope in risk assets as Democratic and Republican lawmakers still haven’t resolved divisions over coronavirus stimulus, including the business liability shield and aid to state and local governments. “The idea here is that you’re not going to see a huge stimulus package,” said Matt Brill, senior portfolio manager at Invesco. “You are probably going to get something done, but it’s probably not going to be enough to put a lot of pressure on rates overall.” On the economic calendar, initial claims for state unemployment benefits are likely to have increased to 725K in the week ended Dec. 5 (from 712K), while Oracle (NYSE:ORCL), Adobe (NASDAQ:ADBE) and Costco (NASDAQ:COST) are set to report quarterly results.
JPMorgan reiterates bearish Tesla thesis
Tesla (NASDAQ:TSLA) continues to sell off following a blistering rally that’s pushed shares up nearly 60% since the announcement in mid-November of its inclusion in the S&P 500. The stock dropped 7% on Wednesday, marking the biggest decline since Sept. 23, when it slumped 10.3% after the EV maker was hit with a network outage. Dramatically overvalued? JPMorgan thinks so. Analyst Ryan Brinkman cited a stock price that trades at 1,325 times its long-term PE multiple and 291 times its 2020 estimate, and lifted its price target to just $90 (shares are currently trading around $600). TSLA -1.5% premarket.
Vaccine reactions
The two anaphylactic allergic reactions reported by U.K. healthcare workers vaccinated against COVID-19 will likely be scrutinized by the FDA as it decides today whether to authorize Pfizer (NYSE:PFE) and BioNTech’s (NASDAQ:BNTX) vaccine in the U.S., though the incident shouldn’t hold up an approval. It’s the sort of issue that the committee “deals with routinely because lots of vaccines are associated with allergic reactions in some small percentage of the population,” said Dr. William Schaffner, a professor of infectious diseases at Vanderbilt University Medical Center, adding that people with underlying health conditions aren’t commonly included in clinical trials. Both NHS workers carried an EpiPen, and are recovering well, but the U.K’s Medicines and Healthcare products Regulatory Agency updated its guidance to advise people who have a history of “significant” allergies to forgo the vaccine.
Back to the office?
As companies keenly await COVID-19 vaccines that promise to return staff to the office, a new survey from the Pew Research Center suggests that won’t be so easy. More than half of U.S. employees currently working from home say they’d like to keep their remote arrangements beyond the pandemic and one-third of those surveyed said they want the option to telework at least sometimes (only 11% said they rarely or never want to work from home). There’s also a clear educational divide. 62% of workers with a bachelor’s degree or more education say their work can be done from home, compared with only 23% of those without a four-year college degree. Will the data weigh on office real estate?
Brexit talks
This time they’re serious about a deadline, or so they say… Meeting after meeting, extension after extension, the U.K. has announced that Sunday will be a “point of finality” for Brexit trade talks if the EU does not “move substantially” in negotiations. It follows a three-hour dinner in Brussels, where British Prime Minister Boris Johnson met with European Commission President Ursula von der Leyen in the hope of breaking months of deadlock. Scallops and turbot were on the menu, in some irony surrounding disagreements over fishing rights in EU and British waters.
Massive stimulus
Fresh Brexit talks aren’t the only thing happening in Europe. It’s a big day for the continent as a whole in terms of economics. The ECB is poised to deliver another blast of monetary stimulus to carry the eurozone out of the pandemic, adding €500B to the Pandemic Emergency Purchase Program (PEPP) and extending it by at least six months to the end of 2021. That’ll keep financing conditions loose through the crisis and complement fiscal aid, like the EU’s €1.8T joint spending program. Leaders hope to finalize that package later today in Brussels, along with issues including climate change and security, after Poland and Hungary agreed on a budget compromise with Germany.
What else is happening…
Starbucks (NASDAQ:SBUX) talks up international opportunities at investor event.
SEC hits General Electric (NYSE:GE) with $200M fine for misleading investors.
Sony (NYSE:SNE) buys anime streaming service from AT&T (NYSE:T) for $1.2B.
New EPA rule makes it harder to toughen air pollution standards.
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Consumer Price Index
10:00 Quarterly Services Report
10:30 EIA Natural Gas Inventory
1:00 PM Results of $24B, 30-Year Note Auction
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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Good morning. Happy Wednesday.
The Asian/Pacific markets mostly did very well. Japan, South Korea, India and New Zealand rallied more than 1%; China dropped more than 1%. Europe, Africa and the Middle East are currently doing well. Denmark, Poland, Turkey, Germany, Russia, Greece, Hungary, Israel, Austria and the Czech Republic are doing great. Futures in the States point towards a slight positive open for the cash market.
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The dollar is down. Oil and copper are up. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
DoorDash delivers bumper IPO
December is usually a quiet time for the IPO market, but this year there will instead be a flurry of offerings as the pandemic upends the traditional calendar. Shares of DoorDash will begin trading on the NYSE this morning under ticker symbol “DASH” after pricing its IPO at $102 apiece, way above its upwardly revised target range. That would raise $3.37B at a valuation of around $38B (more than double its $16B valuation in June) after benefiting from a surge in demand for food delivery services due to COVID-19 restrictions. A day after DoorDash’s debut, Airbnb (ABNB) is set to begin trading, followed by videogame company Roblox (RBLX) and the parent of online retailer Wish, ContextLogic (WISH).
Efforts continue on stimulus front
U.S. stock futures are inching up again after closing at record highs on Tuesday, given the hopes over a vaccine rollout and stimulus efforts in Washington. “There’s one thing that makes investor optimism typically go higher and that’s higher stock prices,” said Keith Lerner, chief market strategist at Truist/SunTrust Advisory Services. Late Tuesday, Treasury Secretary Stephen Mnuchin offered a $916B package to House Speaker Nancy Pelosi that adds a $600 direct payment for most Americans, opening yet another front in the multi-track effort to reach a coronavirus aid agreement. On today’s economic and earnings calendar, the U.S. Labor Department will release its monthly Job Openings and Labor Turnover Survey, or JOLTS, while Adobe (NASDAQ:ADBE) will report results after the bell.
China’s coronavirus vaccine has 86% efficacy
Vaccine headlines continue to pour in following V-Day in the U.K., brighter news on the University of Oxford and AstraZeneca (NASDAQ:AZN) jab and the possibility of mandatory vaccinations for New Yorkers. The latest? China’s state-backed coronavirus vaccine, developed by Sinopharm (OTCPK:SHTDF), was found to have protected 86% of people against COVID-19 in trials conducted on 31,000 volunteers in the UAE. The vaccine has already been administered to hundreds of thousands of people under emergency authorization in China, but it’s yet to receive public use approval from any drug regulators. Unlike shots developed from Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) – which have over 94% efficacy – but rely on mRNA and deep freeze facilities, China’s vaccine is based on an inactivated virus and can be transported at normal refrigerated temperatures. That makes it an attractive option for nations without sophisticated cold-chain infrastructure and developing countries like Indonesia and Pakistan have already signed deals for the vaccine.
Lone Stars
Reports had surfaced earlier this week, but Elon Musk has confirmed his relocation to Texas, joining one-fifth of Americans who have done a “pandemic move.” “First of all, Tesla (NASDAQ:TSLA) and SpaceX (SPACE) obviously have massive operations in California. In fact, it’s worth noting that Tesla is the last car company still manufacturing cars in California. SpaceX is the last aerospace company still doing significant manufacturing in California. For myself, yes I have moved to Texas,” he told the WSJ’s CEO Council summit. “If a team has been winning for too long, they do tend to get a little complacent, a little entitled and then they don’t win the championship anymore. California has been winning for a long time,” he added, doubling down on his displeasure with the state’s regulatory environment. Many companies and tech leaders have shared similar sentiment. Hewlett Packard Enterprise (NYSE:HPE) recently relocated its headquarters from San Jose, California, to Houston, Texas, while Palantir (NYSE:PLTR) moved its HQ to Denver from Palo Alto.
Latte Investor Day
Starbucks (NASDAQ:SBUX) is holding its first Investor Day since December 2018, with shares going on a 72% run since the last event. While the pandemic hit the coffee chain hard at first, resulting in a 40% Y/Y loss in sales in the second quarter, CEO Kevin Johnson doesn’t expect the company to slow down. He sees business in China fully recovering in the current quarter and forecasts earnings in the fiscal year ending September 2021 will beat those of 2019. The pandemic has been hard on Starbucks’ smaller rivals, with market research provider Euromonitor predicting the U.S. will lose at least 2,000 coffee shops this year. Some of things keeping Starbucks competitive are overhauling cafes, raising employee wages and turning to AI, while Johnson will explain further growth efforts later today. Fun fact: The event will feature a virtual coffee tasting, with samples of Starbucks’ holiday blend sent in advance to analysts.
Dinner breakthrough in Brussels?
U.K. Prime Minister Boris Johnson heads to Brussels this evening for a dinner with European Commission President Ursula von der Leyen that’s being cast as a last chance to unlock stalled Brexit negotiations. If all goes well, the two sides could be back in a room hammering out trade details within days, but if it goes badly, a tumultuous no-deal Brexit may be on the menu in three weeks’ time. The talks have been tied up over fishing rights, a competitive playing field for standards and subsidies, and how any agreement might be enforced. Some trust? On Tuesday, the U.K. dropped contentious clauses of its Internal Market Bill that would have given it the power to unilaterally override the Brexit divorce treaty (particularly related to the Irish border).
Green transition friction
Royal Dutch Shell (RDS.A, RDS.B) has been hit by the departure of several clean energy executives amid a split over how aggressively the oil giant should shift towards greener fuels, FT reports. Those include Marc van Gerven, who headed the solar, storage and onshore wind businesses, Eric Bradley, who worked in Shell’s distributed energy division, and Katherine Dixon, a leader in its energy transition strategy team. Other top executives are due to leave the company, though not every move is known to be linked to the pace of change. The wave of resignations comes shortly before Shell is set to announce a strategy update in February, spelling out how it plans to become a net zero emissions business. In August, rival BP (NYSE:BP) said it would shrink oil and gas output by 40% over the next decade, a move analysts predict will force Shell down a similar path.
Dimon weighs in
“Treasurys at these rates… I wouldn’t touch them with a 10-foot pole,” JPMorgan (NYSE:JPM) Chase CEO Jamie Dimon said at Goldman Sachs’ annual financial services conference. The yield on the 10-year Treasury was last at just 0.9% and has stayed below 1% since breaking below that threshold during the pandemic. As a lender with $3.2T in assets, JPMorgan still has to continually purchase Treasurys and other low-yielding investments to earn a spread, but that’s one reason that bank profitability and stock values have been under pressure since the coronavirus crisis. What about equities? “There may be a bubble in small parts of the stock market, not all of it,” Dimon added, signaling a strong end to year on Wall Street. “You didn’t ask me, so I’ll tell you anyway, trading and investment bank numbers are up about 20%, maybe a little more (in the fourth quarter). I do think we hit the bottom, and we’re growing,” he said of longer-term trends for trading revenues.
Money laundering overhaul a boon for banks
Congress is looking to approve the first overhaul of U.S. anti-money laundering laws in decades. The U.S. House of Representatives signed off on legislation yesterday that would force corporations to register the IDs of their beneficial owners with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to stop criminals from using shell companies. Big benefit for banks… Financial institutions would no longer have to act as the information collecting middlemen between companies and law enforcement, resulting in a lower overall cost of compliance. The bill also directs law enforcement, bank supervisors and lenders to set up channels of communication to streamline the process of reporting suspicious activity.
What else is happening…
Uber (NYSE:UBER) offloads flying taxi Elevate business to Joby Avionics.
Boeing (NYSE:BA) makes first 737 MAX delivery since FAA ended ban.
Peacock (NASDAQ:CMCSA) passes 26M subscribers as streaming growth continues.
U.S. to impose preliminary duties on silicon metal imports.
‘There seems to be no end in sight’ for strong home sales – Gundlach.
Tuesday’s Key Earnings
Chewy (NYSE:CHWY) +2.5% AH posting sixth sales beat in a row.
GameStop (NYSE:GME) -15.8% AH after sales and EBITDA fell short.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:00 Job Openings and Labor Turnover Survey
10:00 Wholesale Inventories (Preliminary)
10:30 EIA Petroleum Inventories
1:00 PM Results of $38B, 10-Year Note Auction
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Good morning. Happy Tuesday.
The Asian/Pacific markets were mixed. New Zealand, Taiwan, Thailand and the Philippines closed up; Hong Kong and South Korea closed down. Europe, Africa and the Middle East currently lean down. Turkey and the UAE are doing well; the UK, France, Greece, South Africa, Switzerland, Spain and Italy are down. Futures in the States point towards a moderate down open for the cash market.
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The dollar is unchanged. Oil and copper are down. Gold is up; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
V-Day
The U.K. began administering the first COVID-19 vaccines to the public this morning after becoming the first country in the world to approve a jab from Pfizer (PFE) and BioNTech (NASDAQ:BNTX). The first recipient was grandmother Margaret Keenan, who turns 91 next week. She received the shot at 6:31 a.m. at University Hospital Coventry (U.K. time, 07.31 CET), one of a network of hospital hubs where the initial phase of the U.K. program will be rolled out on what has been dubbed “V-Day.” The first 800,000 doses in the Britain are going to people over 80 who are either hospitalized or already have outpatient appointments scheduled, along with nursing home workers. U.S. and EU authorities are also reviewing the vaccine, alongside rival products developed by Moderna (NASDAQ:MRNA), and a collaboration between Oxford University and drugmaker AstraZeneca (NASDAQ:AZN).
‘Vaccine Summit’ at the White House
Over in the U.S., hospitals are rushing to firm up plans for deciding which high-priority groups can receive the COVID-19 vaccine first, with initial supplies widely expected to fall short. December vaccine deliveries are forecast to only be enough for about 20M people, according to federal officials, slightly less than the 24M needed to vaccinate all front-line medical professionals and long-term care residents. President Trump is meanwhile expected to sign an “America First” executive order today designed to ensure that U.S. efforts to assist other countries in vaccinating their populations against COVID-19 take on a lower priority than domestic inoculations. The “Vaccine Summit” at the White House will also feature talks with administration officials and drug distributors, who will discuss the process of reviewing vaccine candidates and distributing them, just days before the FDA is expected to authorize a promising vaccine made by Pfizer (NYSE:PFE).
Q from your company Slack channel: Can your boss fire you if you refuse to get a COVID vaccine? Yes, but there are may be a few exceptions (medical reasons, if the workforce is unionized, or if taking it is against a “sincerely held” religious belief).
Roughly four in 10 Americans say they would “definitely” or “probably” not get a vaccine, according to a recent survey by Pew Research. To achieve herd immunity, experts say that about 70% of the population needs to be vaccinated or have natural antibodies.
Are retail investors changing the nature of the market?
What do increasing service disruptions on trading platforms like Robinhood and the pandemic market rally have in common? It’s a sign of the DIY investing atmosphere. In many ways, the retail investor has become a more powerful collective force than the professional investor, and they simply don’t care about the same things as the experts. In fact, individual investors now account for roughly 20% of stock-market activity on average and nearly one-quarter of trades on peak days, according to Joe Mecane, the head of execution services at Citadel Securities (the firm is the leading retail market maker in the U.S.).
Quote from Jim Cramer: The returns of the individual investor have changed the “entire character of the market,” and the professionals are no longer the only cohort that matters.
Ever since the dot-com bubble in 2001, every big market move has been framed as “what could go wrong.” Conventional wisdom also said stocks could not be trusted as an asset class, and should be traded together as a unit, as they tend to lose their value quickly if things go awry. That theory only grew in popularity after the financial crisis, leading many institutional investors into ETFs or index funds (and the rest into the safety of bonds) instead of picking individual stocks. A new generation of investors, which entered the market after the rise of commission-free trading, is turning that mentality on its head. They’re much more upbeat than the older generation and they’re doing their own research on platforms like Seeking Alpha, instead of paying attention to the upgrades and downgrades of Wall Street analysts. The retail bros also don’t care about traditional parameters of valuation (P/E and P/S ratios) and could always trade out of a stock for free because of commission-free trading.
Mentality of the retail investor: 1) Distrust of index funds (they like stock picking), 2) Rigorously independent (trades based on their own research), 3) Risk taking (buying during the height of the pandemic), 4) ESG investing (believe in environmental sustainability as a business model, not just an ethos – i.e. Tesla).
Uber parks plans for self-driving car
Uber (NYSE:UBER) is swapping its self-driving car operations for a minority stake (26%) in Aurora Innovation, the driverless vehicle startup backed by Sequoia Capital and Amazon (NASDAQ:AMZN). CEO Dara Khosrowshahi, who will join the Aurora board, has already moved to restructure the ride-hailing giant to deliver on a promise to make the company profitable, scaling back many of its expensive side projects like electric bikes and flying cars.
Full details: Uber will invest $400M in the startup and transfer over about 1,200 employees from its self-driving unit, tripling the headcount of Aurora. The latter is led by autonomous-driving pioneer Chris Urmson, who helped launch Google’s (GOOG, GOOGL) autonomous-driving project, and would notch a $10B valuation following the transaction with Uber (it was last valued at $7.25B in April 2019).
MSM shakeup ahead of Biden presidency
Reports have been surfacing that CNN (NYSE:T) President Jeff Zucker will depart the network after the presidential inauguration, but he may not be the only mainstream media leader to leave the position. Phil Griffin, the president of MSNBC (NASDAQ:CMCSA) for the past twelve years, will step down shortly after Joe Biden’s inauguration in January, a major shakeup at a news channel that has raised its profile with political coverage, but has struggled to keep pace with rivals.
Bottom line: While November was MSNBC’s most-watched month in its 24-year history, the channel finds itself in a challenging competitive landscape at the end of President Trump’s time in office. MSNBC still ranked third in cable news behind CNN and Fox News (NASDAQ:FOX) last month.
Rashida Jones has been named as Griffin’s successor, launching her to one of the highest echelons in TV news and making her the first Black female executive to run a major general news cable network. “She has an outstanding track-record and she leads with a laser-like focus and grace under pressure. I know she will be an excellent leader for MSNBC,” NBCUniversal News Group Chair Cesar Conde wrote in an internal memo.
What else is happening…
Federal judge shuts down TikTok ban in win for ByteDance (BDNCE).
Palantir (NYSE:PLTR) closes up 21% on report of new FDA contract.
MicroStrategy (NASDAQ:MSTR) raising $400M to buy more Bitcoin (BTC-USD).
JD Health, healthcare unit of JD.com (NASDAQ:JD), soars in Hong Kong debut.
Monday’s Key Earnings
Stitch Fix (NASDAQ:SFIX) +33.6% AH on earnings smasher, blasting past estimates.
Toll Brothers (NYSE:TOL) -2.5% AH as Q1 guidance came in soft.
Today’s Markets
6:00 NFIB Small Business Optimism Index
8:30 Productivity and Costs
8:55 Redbook Chain Store Sales
1:00 PM Results of $56B, 3-Year Note Auction
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets leaned to the upside. South Korea, India, Taiwan, Australia, Indonesia, Thailand and the Philippines did well; Japan, China and Hong Kong were weak. Europe, Africa and the Middle East currently lean down but movement is minimal. Denmark and Saudi Arabia are up; France, Spain, the Netherlands, Belgium and Portugal are down. Futures in the States point towards a down open for the cash market.
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VIDEO: Trading Ideas and a Special Offer
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The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Pandemic relief
Stimulus appears to be back in the driver’s seat that’s needed to power the market higher as new coronavirus cases exceeded 200K for a fourth straight day on Saturday and much of California went into lockdown. Weak non-farm payrolls data from Friday, which showed the fewest number of workers (245,000) added to the U.S. economy in six months, had already built on expectations for a coronavirus aid package, helping send stock indexes to fresh all-time highs. Now, a bipartisan group of senators is poised to unveil a new $908B stimulus bill as early as today, though equity futures are holding their breath before any formal announcement. The plan includes $288B in small business aid, $180B in unemployment benefits, $160B for cash-strapped state and local governments, as well as help for troubled sectors, including $17B for the airline industry. Louisiana Republican Senator Bill Cassidy, part of the group behind the effort, also told Fox News Sunday that he was “optimistic” that both President Trump and Senate Majority Leader Mitch McConnell “will come on board” with the proposal.
The pound takes a tumble
Sterling slipped 1.5% to $1.3241 overnight after Boris Johnson told the EU that Britain must have “freedom” to make its own rules and cabinet ministers said he should pursue a no-deal Brexit unless Brussels backs down. According to the Times newspaper, Johnson and Ursula von der Leyen, the president of the European Commission, agreed to a “final throw of the dice” this week, but we’ve heard that many times before. Both sides admit that “no agreement is feasible” without movement on three key issues, including governance, fishing quotas and competition rules, known as the level playing field. A senior No. 10 figure also warned the chances of getting a pact were now “no better than 50-50” after more than four years and five months of talks.
China notches record trade surplus
Global demand for Chinese goods keeps growing as protective gear and work-from-home tech products serve as pillars for the nation’s overseas trade during the pandemic. China’s November exports were up 21% from a year earlier, according to the General Administration of Customs, while imports were 4.5% higher, resulting in a $75.42B trade surplus that topped records set in May. November shipments to the U.S., China’s No. 3 trading partner, were meanwhile up 46% compared to a year earlier, and while imports of American goods were ahead by 33%, they were still far below farm and energy levels promised in the Phase One trade deal signed in January. While President Trump has focused on the trade deficit with China, Joe Biden said he would concentrate on IP theft, illegal subsidies and forced “tech transfers,” though he wouldn’t immediately remove the tariffs that remained on about $370B of Chinese goods.
Red-hot IPO market
Airbnb (ABNB) is boosting its IPO price range to $56-$60, from $44-$50, which would see the home-rental company raise as much as $3.1B at a valuation of $42B, sources told the WSJ. DoorDash (DASH), the food-delivery company that is expected to debut Wednesday, also plans to price its shares in a range of $90-$95 a share (already raised from between $75-$85). So far this year, more than $140B has been raised in initial public offerings on U.S. exchanges, far exceeding the previous full-year record high set at the peak of the dot-com boom in 1999, according to data from Dealogic. Also on deck to go public this month are Max Levchin’s Affirm Holdings, online video-game company Roblox, and ContextLogic, the parent of discount online retailer Wish.
‘Operation Turtle Speed’
In an op-ed for The Dispatch, Johns Hopkins Professor Marty Makary slammed the FDA for “holding up COVID-19 vaccine approval” and dubbed the agency’s progress “Operation Turtle Speed.” “Pfizer (NYSE:PFE) submitted data detailing the safety and effectiveness of its vaccine on Nov. 22, but rather than immediately convening experts, the FDA scheduled a review meeting on Dec. 10, almost three weeks later. As Pfizer’s application sits on the shelf at the FDA awaiting authorization, about 27,000 Americans will have died,” he added. “As a Johns Hopkins scientist who has conducted more than 100 clinical studies and reviewed thousands more from the scientific community at large, I can assure you that the agency’s review can be done within 24 to 48 hours without cutting any corners. They just need to work harder.” Note: Bahrain became the second country to grant emergency-use authorization to Pfizer and BioNTech’s (NASDAQ:BNTX) vaccine on Friday, while the U.K. became the first this past Wednesday.
Digital yuan concept
JD.com (NASDAQ:JD) has become the first online platform to accept China’s central bank digital currency (CBDC), known as the digital yuan. Shoppers will need to have received the homegrown currency as part of a lottery-style experimental giveaway to residents of Suzhou, following another lottery for citizens in Shenzhen, but it’s a big step toward normalizing CBDCs. Unlike cryptocurrencies, the PBOC controls the digital yuan, giving the country more power and a remarkable amount of information about what consumers are spending their money on.
New standards
While 5G networks are still in their infancy, with 100 wireless carriers worldwide deploying the service in limited areas, the preparation for 6G development is getting started in several regions around the world. Nokia (NYSE:NOK) is leading a group of companies and universities in an EU-funded wireless project called Hexa-X to help jump-start a new generation of the mobile technology. In addition to the program in Europe, there’s Next G Alliance and O-RAN Alliance in the U.S., as well as funding for a 6G development group in China. “The main goal will be to develop the vision, the road map and the timeline,” said Nokia’s Devaki Chandramoul, who is the head of North American Standardization and one of the engineers leading the Hexa-X group. While 5G is known to have data transmission speeds at least 10x greater than 4G – rolled out in 2009 – 6G is expected to use super high-frequency terahertz airwaves and deliver advanced connectivity.
Activist fund has Exxon in its crosshairs
Exxon Mobil (NYSE:XOM) is facing the threat of a proxy fight from Chris James, a hedge fund veteran turned activist investor, whose new firm is going after four of Exxon’s 10 board seats. According to the WSJ, Engine No. 1 LLC is preparing to send a letter to the board, urging a greater focus on investments in clean energy while cutting costs elsewhere to preserve its dividend. The activist fund has the support of California State Teachers’ Retirement System and expects other shareholders to be sympathetic to the cause, given widespread frustration over Exxon’s stock performance, which is down 40% YTD. Key to the outcome will be the reaction from Vanguard, BlackRock (NYSE:BLK) and State Street (NYSE:STT), which together control nearly 20% of Exxon’s shares. XOM -1.7% premarket.
Pornhub business ties?
Mastercard (NYSE:MA) is investigating allegations against Pornhub.com after a NYT opinion piece written by Nicholas Kristof said many of the videos posted on the adult website depicted child sexual abuse and nonconsensual violence. “If the claims are substantiated, we will take immediate action,” Mastercard said in a statement, while Pornhub denied the allegations, declaring, “any assertion that we allow CSAM (child sexual abuse material) is irresponsible and flagrantly untrue.” Canadian Prime Minister Justin Trudeau also said his government was working with police and security officials to address the issues raised in the column as 20 MPs called for a crackdown on Pornhub, which is effectively based in Montreal. PayPal (NASDAQ:PYPL) has already suspended cooperation with Pornhub, while American Express (NYSE:AXP) has a longstanding policy that prohibits card acceptance on digital adult content websites.
What else is happening…
Reorganization at Disney (NYSE:DIS) spreads to all parts of the company.
Tesla’s (NASDAQ:TSLA) strategy could include ride-hail service before robotaxi launch.
Pushing into software and services, Cisco (NASDAQ:CSCO) scoops up IMImobile.
Another blow to NY? Goldman (NYSE:GS) weighs asset management move to Florida.
Today’s Economic Calendar
12:30 PM TD Ameritrade IMX
3:00 PM Consumer Credit
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