Before the Open (Dec 14-18)

Good morning. Happy Friday. Happy Quad Witching.

The Asian/Pacific markets leaned down. Hong Kong, New Zealand, Australia and Malaysia were weak. Europe, Africa and the Middle East are currently mixed. Denmark, Turkey, Greece, Germany and Norway are up; Poland, Russia, South Africa, Spain and Portugal are down. Futures in the States point towards a flat open for the cash market.

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The dollar is up. Oil and copper are up. Gold is up; silver is flat. Bonds are up.

Stories/News from Seeking Alpha…

Tesla makes grand entrance into S&P 500

Index funds tracking the S&P 500 have a small window today to buy nearly $80B worth of Tesla (NASDAQ:TSLA) stock as the EV maker gears up to join the widely tracked stock index. It’s going to be a wild scene for investors in the minutes before Friday’s close, and traders are also watching how the giant addition will ripple through the derivatives market, with big swings influencing options pricing. Adding to the volatility: Tesla is easily the most traded stock on Wall Street, and has surged 50% since November (when its S&P debut was announced) and almost 700% year to date. Helping to smooth out the addition: Quadruple witching, which refers to the day that options and futures on both indexes and stocks expire simultaneously, and generally produces heavy volumes that can boost liquidity. At over $600B, Tesla will become the most valuable company ever admitted to Wall Street’s main benchmark, accounting for over 1% of the S&P 500 index.

The bulls and the bears

Bulls view Tesla (TSLA) CEO Elon Musk as a visionary that can push the company’s disruptive technology ahead of its competitors. They also see Tesla posting above-average gains due to increasing adoption rates in the global electric vehicle market and its solar energy business. Bears meanwhile focus on Musk’s track record of missed production targets and corporate governance risk after he was forced to step down as chairman to settle fraud charges in 2018. They also cite an inflated P/E ratio, as well as a meteoric rise that has made Tesla the most valuable auto company in the world despite production that is a fraction of rivals. Is it too late to join the Tesla party? EV = extreme valuation? Catch up on the latest analysis by SA Authors.

Record highs

U.S. stock index futures are holding their breath after coming off a record-setting session on Thursday, which saw all three of the major averages close at new highs. Leaders on Capitol Hill said they are close to an agreement that would provide $900B in coronavirus aid, including direct payments to individuals, enhanced unemployment benefits and help for small businesses. The negotiations, which have stretched on for months, are up against the wire, with federal funding lapsing on Saturday – meaning another stopgap spending measure may be needed. Other big news… FDA advisors overwhelmingly backed Moderna’s (NASDAQ:MRNA) COVID-19 vaccine on Thursday evening, marking a key step towards emergency authorization by the agency (the latest stimulus package also provides funds for vaccine distribution).

Bank stress tests

The Federal Reserve comes out with its latest round of bank stress tests today, which look out how well U.S. lenders can handle fallout from the coronavirus crisis. Previous results released in the summer found that banks could weather heavy capital losses, though the Fed is running another set of tests this year given the severity of the economic slump. Among those analyzing the scorecard are bank investors, given the constraints imposed on buybacks and dividends since June to preserve cash for lending during the pandemic. The new assessment will determine if the Fed will keep the restrictions in place, though many analysts expect them to remain until the second half of 2021. Differentiation is also a possibility. Healthier banks are likely to argue they should have more discretion in what they pay out, especially given the detailed “stress capital buffer” approach vs. the old pass/fail ratings.

Gold vs. Bitcoin

Goldman Sachs is the latest to weigh into the gold vs. Bitcoin (BTC-USD) debate after JPMorgan argued that the rise of cryptocurrencies in mainstream finance is coming at the expense of bullion. “Gold’s recent underperformance versus real rates and the dollar has left some investors concerned that Bitcoin is replacing gold as the inflation hedge of choice,” the bank said in a research note. While there has been some substitution, “we do not see Bitcoin’s rising popularity as an existential threat to gold’s status as the currency of last resort.” Bitcoin has had a wild month, challenging $24,000 yesterday after passing the $20,000 milestone for the first time on Wednesday. Gold’s up 24% YTD, but has since drifted after setting a record above $2,075/ounce in August.

‘Moment of reckoning’

Microsoft (NASDAQ:MSFT) was hacked as part of a suspected Russian campaign that has hit multiple U.S. government agencies by taking advantage of the widespread use of software from SolarWinds (NYSE:SWI). “We can confirm that we detected malicious SolarWinds binaries in our environment, which we isolated and removed,” Microsoft spokesman Frank Shaw said on Twitter. “We have not found evidence of access to production services or customer data. Our investigations, which are ongoing, have found absolutely no indications that our systems were used to attack others.” So far the hackers are known to have monitored email or data across business networks within the U.S. Departments of Defense, State, Treasury, Energy, Homeland Security and Commerce, as well as the National Nuclear Security Administration, though the malware didn’t affect national security functions. “As much as anything, this attack provides a moment of reckoning. It requires that we look with clear eyes at the growing threats we face and commit to more effective and collaborative leadership by the government and the tech sector in the United States to spearhead a strong and coordinated global cybersecurity response,” Microsoft President Brad Smith added in a blog post.

Race to the courthouse

A bipartisan group of more than three dozen state attorneys general yesterday filed an antitrust challenge to Google’s (GOOG, GOOGL) core search engine, marking the latest in a flurry of lawsuits against the tech giant. Another case on Wednesday came from a group of ten Republican attorneys general and there’s another from the U.S. Department of Justice filed in October. Legal strategy? Throw everything against the wall and see what sticks. The suits cover everything from monopolistic practices in Google’s ad business to exclusive deals on phones and browsers.

Chips among latest U.S.-China tensions

Shares of Semiconductor Manufacturing International (OTCQX:SMICY) slumped 5.2% in Hong Kong after Reuters reported that China’s biggest chipmaker, along with 80 other companies, will be added to the U.S. Commerce Department’s Entity List. The designation will deny SMIC access to U.S. technology from software to circuitry, on top of less severe curbs imposed in September, when the U.S. placed it on an export restrictions list for supplying the military. Bigger picture: SMIC, which is a supplier to Qualcomm (NASDAQ:QCOM) and Broadcom (NASDAQ:AVGO), lies at the heart of China’s ambition to build a high caliber chipmaking industry and wean itself off of American technology. Beijing is also planning to provide broad support for so-called third-generation semiconductors in its next five-year plan to boost domestic self-sufficiency.

What else is happening…

Sony (NYSE:SNE) pulls buggy Cyberpunk 2077 from PlayStation Store.

Disney’s (NYSE:DIS) Bob Iger up for U.S. ambassador to China post.

Big bet on remote care… Philips (NYSE:PHG) buys BioTelemetry (NASDAQ:BEAT) for $2.8B.

Bitcoin exchange Coinbase files confidentially for IPO.

Robinhood Financial fined $65M by SEC for misleading users.

Thursday’s Key Earnings
Accenture (NYSE:ACN) +6.9% on FQ1 beat, raising FY2021 outlook.
BlackBerry (NYSE:BB) -4.2% AH posting a Q3 revenue decline.
FedEx (NYSE:FDX) -3.6% AH holding back on 2021 guidance.
General Mills (NYSE:GIS) +1.3% leaning on pet business for strong quarter.
Rite Aid (NYSE:RAD) +17.4% soaring after a big profit beat.

Today’s Economic Calendar
8:30 Current Account
10:00 Leading Indicators
11:10 Fed’s Evans Speech
11:10 Fed’s Brainard Speech
1:00 PM Baker-Hughes Rig Count

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Good morning. Happy Thursday.

The Asian/Pacific markets leaned to the upside. China, Hong Kong and Australia did the best. Europe, Africa and the Middle East are currently doing well. Poland, France, Germany, Russia, South Africa, Switzerland, the Netherlands, Portugal and the Czech Republic are leading. Futures in the States point towards a moderate gap up open for the cash market.

————— Online Course: Mini Masterclass in Trading —————

The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.

Stories/News from Seeking Alpha…

Powell’s dovish stance assures investors

“The outlook for the economy remains extraordinarily uncertain,” Fed Reserve Chairman Jerome Powell said during his press conference after the Fed kept the federal funds rate near zero. Still, he assured investors that the central bank has the flexibility to provide more accommodation and remains open to increasing the amount of asset purchases or buying securities with longer-term maturities in the future. The Fed expects the economy should perform strongly in H2 2021 due to the vaccines being distributed now. For the time being, he sees more fiscal support is needed. The market responded to Powell’s reassurances with the S&P 500 reaching session highs on Wednesday.

U.S. futures advance with stimulus hopes

Futures for the three major U.S. stock averages point to gains at the open as Congress haggles over a virus relief deal and stock in Europe rise with the prospect of vaccines being distributed by the end of the year. Nasdaq futures gain 0.5%, S&P futures rise 0.2%, and Dow futures move up 0.5%. The Stoxx Europe 600 rises 0.4%. Bitcoin surges past $22,000, building on Wednesday’s push above $20,000. In Asia, Hong Kong’s Hang Seng index closed up 0.8%, Japan’s Nikkei 300 rose 0.5%, and the Shanghai Composite index advanced 1.1%.

It’s down to the final details for Congress’s virus relief plan

Congressional leaders are still trying to hash out details on an almost $900M coronavirus relief plan that could be unveiled as soon as Thursday. The draft proposal includes $600 in direct payments to individuals, $300 per week in extra unemployment insurance payments, ~$17B for airlines and more aid for small businesses. It doesn’t include aid for state and local governments or lawsuit liability protection, the two issues that have kept Republicans and Democrats at an impasse for months.

Amazon warehouse workers in Alabama can vote on unionizing

Amazon (NASDAQ:AMZN) warehouse workers in Alabama who want to unionize will be allowed to vote on the matter, the National Labor Relations Board said. Last month, the Retail, Wholesale and Department Store Union filed paperwork for an election that would represent 1,500 warehouse workers in Bessemer, Alabama. Amazon, though, said in its documents filed with the NLRB that the action would actually represent more than 5,700 employees, which means the union likely had fewer than the 30% of worker signatures needed for the regulator to oversee the election. The NLRB disagreed, saying it was “administratively satisfied” that the threshold was met. If the workers vote in favor of the union, Bessemer would be the first U.S.-based Amazon facility with a union.

Adidas to add more brick-and-mortar

Adidas (OTCQX:ADDYY) plans to invest again in brick-and-mortar stores even after seeing a boom in e-commerce sales during the pandemic and stay-at-home trends work in its favor. “There’s no doubt that online has accelerated two to three years into the future… but I actually think if you asked most people, there’s a big social element about going out and shopping and just seeing and feeling the products again,” stated CEO Kasper Rorsted in a CNBC interview. The German company plans to announce next March details on where it will add stores and how many. There are some hints that the stores could be aligned closely with the e-commerce business. Adidas is coming off a 51% increase in online sales in Q3 and a 93% pop in Q2. For the year, Adidas forecasts churning up $4.9B of online sales.

Pet subscription service BarkBox to go public in SPAC deal at $1.6B with debt

BarkBox – a start-up offering a monthly subscription for dogs – will go public via merger with special-purpose acquisition company Northern Star Acquisitions Corp. (NYSE:STIC), The Wall Street Journal reports. The deal is valued at $1.6B including debt, and Northern Star is expected to raise $454M. The move is not only the latest in the pet world – where pandemic spending on pets has led to recent success for Petco (WOOF), returning to public markets, and for Chewy (NYSE:CHWY) – but also the latest SPAC deal, in the busiest year for the merger vehicle yet.

What else is happening…

States’ antitrust suit accuses Google (GOOG, GOOGL) of colluding with Facebook (NASDAQ:FB) to rig ad auctions.

Canada set to okay Boeing (NYSE:BA) 737 MAX design change.

Boeing (BA) hires pilots for airlines to help relaunch 737 MAX.

IBM (NYSE:IBM) elects CEO Arvind Krishna as Chairman.

Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Housing Starts
8:30 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

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Good morning. Happy Wednesday.

The Asian/Pacific markets did well. Hong Kong, India, Taiwan, Australia, Indonesia and the Philippines rallied more than 1%. Europe, Africa and the Middle East currently lean to the upside. Denmark, Poland, Germany, Greece, Austria and the Czech Republic are up more than 1%. Futures in the States point towards a positive open for the cash market.

————— Online Course: Mini Masterclass in Trading —————

The dollar is down. Oil is flat; copper is up. Gold and silver are up. Bonds are down.

Stories/News from Seeking Alpha…

Fed’s final meeting of 2020

Investors this afternoon will tune into the Fed’s latest quarterly projections on economic growth, unemployment, inflation and interest rates, which will be the first since the pandemic intensified, only to be followed by historic vaccine progress. While no changes are expected on rates (they’re already near zero), the central bank’s asset purchase program could see certain adjustments. Some expect the Fed to increase the current pace of $120B bonds per month or buy longer-dated bonds to stimulate the economy, though others see it providing “outcomes-based” guidelines that are needed before tightening monetary policy. At Jerome Powell’s press conference there could also be some talk about how monetary policy can address inequality and the climate, as well as some focus on the timing of the inflation overshoot.

World’s biggest cannabis company

Shares of Tilray (NASDAQ:TLRY) and rival Aphria (NASDAQ:APHA) are surging in premarket trade, up nearly 20% and 12%, respectively, after Bloomberg Canada reported that the pot firms are in advanced talks to merge. The combined company is expected to keep the Tilray name, but with Aphria CEO Irwin Simon as CEO, and Aphria holding a bigger stake and most of the board seats. It’s also seen moving its HQ to the U.S. as it focuses on winning market share in that country. Note: BNN Bloomberg also reported over the summer that Aphria was in talks to merge with Aurora Cannabis (NYSE:ACB), but that deal never came to fruition.

IPO market on fire

ContextLogic (WISH), the parent company of e-commerce platform Wish, is expected to begin trading on the Nasdaq this morning following the blockbuster IPOs of Airbnb (NASDAQ:ABNB) and DoorDash (NYSE:DASH) last week. Shares were priced at $24 each, at the top end of the marketed range, raising $1.1B and giving the company an initial valuation of $17B. The offering is the 31st on a U.S. exchange this year to exceed $1B, according to data compiled by Bloomberg. More records… With Wish, more than $20B has now been raised in public listings in December, while the 2020 IPO total has reached more than $174B.

Futures extend gains

Signs of progress toward a coronavirus stimulus package lifted sentiment on Tuesday, allowing the S&P 500 to shake off a four-day losing streak, while futures suggested the rally could continue after advancing another 0.3% overnight. Top congressional leaders indicated they were inching closer to striking a deal after a day of meetings, while vaccine optimism and a dovish stance at today’s Fed meeting are expected to propel markets further. “It is just another excuse for those that missed the rally, or that are bullish anyway to buy into it,” said Luca Paolini, chief strategist at Pictet Asset Management. U.S. retail sales data will also be published this morning, which could show a rise for the seventh consecutive month in November, as well as purchasing managers surveys that are likely to display a continued expansion in the U.S.

Vaccine rollout

The time frame in which most Americans will be eligible for a coronavirus vaccine keeps moving up. Just two weeks ago, Dr. Moncef Slaoui, head of Operation Warp Speed, said the U.S. could immunize one-third of its population within three months, but it now looks like most of America could get a vaccine by that date. “Depending on the decisions by our governors… but I believe we’ll have enough supply out there to be reaching out to the general public for administration – at your CVS (NYSE:CVS), Walgreens (NASDAQ:WBA), Krogers (NYSE:KR) – by the end of February into March,” said Health and Human Services Secretary Alex Azar. That timeline could be even earlier if the approval of the AstraZeneca (NASDAQ:AZN) and Johnson & Johnson (NYSE:JNJ) vaccine comes soon, he added. On Tuesday, the FDA said that a jab developed by Moderna (NASDAQ:MRNA) was “highly effective,” setting the stage for an emergency authorization later this week, while (NYSE:PFE) and BioNTech (NASDAQ:BNTX) began shipping their vaccine nationwide on Sunday.

Political ad ban on pause

Facebook (NASDAQ:FB) is lifting its temporary post-election ban on political ads – that was implemented to “prevent confusion or abuse” – as Georgia gears up for a Jan. 5 runoff election that will determine which party takes control of the Senate. “We agree that our ad tools are an important way for people to get information about these elections,” Facebook wrote in a blog post. “We will reject ads that target locations outside of Georgia or that are not about the elections for violating our Advertising Policies. And, we will continue to prohibit any ad that includes content debunked by third-party fact-checkers or delegitimizes the Georgia runoff elections.” As of now, Republicans will hold a 50-48 majority in the Senate, but if Democrats win both of the Georgia runoff races, Vice President-elect Kamala Harris would be the tie-breaking vote, giving the party control of the White House and Congress. Last week, Google (GOOG, GOOGL) also lifted its own temporary pause on elections-related advertising after a blackout of more than a month due to concerns over election misinformation.

Turning a corner

In some good news for lenders like Deutsche Bank (NYSE:DB), Banco Santander (NYSE:SAN) and ING (NYSE:ING), the European Central Bank has lifted a de facto ban on bank dividends, which had been frozen in an effort to preserve cash for lending during the pandemic. Strict limits will still be in place on payouts in order to ensure lenders maintain financial strength. Dividends and share buybacks must “remain 15% of cumulated profit for 2019-20 and not higher than 20 basis points of the Common Equity Tier 1 ratio, whichever is lower,” the central bank announced. The Fed has also barred the biggest U.S. banks from stock buybacks and capped dividends at second-quarter levels through the rest of 2020.

iPhone production boost

Last quarter, Apple’s (NASDAQ:AAPL) iPhone sales missed estimates due to the pandemic-related iPhone 12 delay, but things are looking much different this time around. Reports suggest the company will produce 95M to 96M iPhones for H1 2021, which is up nearly 30% on the year due to strong 5G demand. Wedbush’s Daniel Ives notes that the target is “well ahead of Street expectations” and “another bullish sign of iPhone 12 demand,” as the stock climbed 5% on Tuesday, with more gains likely at the open. There are also plans to ramp up to 230M iPhones next year, up 20% Y/Y, though an industry-wide component shortage could put pressure on Apple’s goals.

What else is happening…

2021 Ford (NYSE:F) Mustang Mach-E begins to hit showrooms.

Spotify (NYSE:SPOT) seals podcast deal with Prince Harry, Meghan Markle.

Solar tax credit extension may be linked to coronavirus aid.

Amazon (NASDAQ:AMZN) says Pentagon cloud bid was superior to Microsoft’s (NASDAQ:MSFT).

IBM (NYSE:IBM) bolsters digital payment solutions with fintech Expertus.

Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Retail Sales
9:45 PMI Composite Flash
10:00 Business Inventories
10:00 NAHB Housing Market Index
10:00 Atlanta Fed’s Business Inflation Expectations
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:30 PM Chairman Press Conference

—————

Good morning. Happy Tuesday.

The Asian/Pacific markets leaned to the downside. China and Malaysia did well; Japan, Hong Kong, New Zealand, Taiwan and Australia did well. Europe, Africa and the Middle East are currently mixed. Poland, Turkey, Germany, Finland, Netherlands, Australia and the Czech Republic are up; Denmark, the UAE, Greece, Portugal and Israel are down. Futures in the States point towards a moderate gap up open for the cash market.

————— Online Course: Mini Masterclass in Trading —————

The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.

Stories/News from Seeking Alpha…

Fleeing the city

Businesses and residents are continuing to flee large American cities in droves. A plethora of new taxes and regulatory schemes, surging poverty and violent crime, and a nightlife and culture brought to a near halt by the coronavirus crisis have sped up the exodus, while the pandemic exacerbated a shift towards remote work as a whole. In fact, New York lost at least 300K residents this year, followed by substantial population losses in San Francisco, Los Angeles, Chicago and D.C. Most have overwhelmingly relocated to the Sun Belt or the West outside of California, and Wall Street is taking notice. “I suspect Florida will soon rival New York as a finance hub, due in part to the ‘Tax and Spend’ policies of New York,” said Leon Cooperman, the billionaire former hedge fund manager and CEO of Goldman Sachs Asset Management who fled to Boca Raton.

Exodus out of California

Not only is Oracle (NYSE:ORCL) relocating its headquarters from California to Texas, but co-founder Larry Ellison is moving his primary residence to Hawaii, becoming the latest Silicon Valley executive to depart the state where they built their fortunes. “I’ll be using the power of Zoom to work from the island of Lanai,” he wrote in an email. The announcement comes just days after Tesla’s (NASDAQ:TSLA) Elon Musk, a close associate of Ellison’s, confirmed that he had moved to Texas, after expressing displeasure with California’s regulatory environment. Hewlett Packard Enterprise (NYSE:HPE) also recently relocated its headquarters from San Jose, California, to Houston, Texas, while Palantir (NYSE:PLTR) moved its HQ to Denver from Palo Alto.

Latest stimulus proposal

The stay-at-home trade returned to Wall Street on Monday as NYC Mayor Bill de Blasio warned about a potential “full shutdown” that would see the city join California and Michigan in reinstating business restrictions in the hopes of slowing COVID-19. U.S. futures are now pressing higher, with the Dow and S&P 500 advancing 0.6% and Nasdaq up 0.4%, following stimulus headlines out of Washington. A bipartisan group of lawmakers put forward another economic relief package on Monday evening, which would split a previously proposed $908B package into two parts. A first bill of $748B would avoid the thorniest issues holding up a deal by focusing on spending programs that are favored by both Democrats and Republicans, while a second $160B measure would be for state and local aid.

Electoral College affirms Biden as president-elect

The Electoral College on Monday formalized Joe Biden’s victory in last month’s presidential election, as meetings in state capitals nationwide affirmed the Democrat had scored the more than 270 votes needed to take office. Courts have repeatedly rejected lawsuits by the Trump campaign, which have alleged massive fraud, ballot harvesting, illegal votes, election machine manipulation, and fake ballots and tallies, to overturn the election results. Attorney General William Barr, who submitted his resignation on Monday, has also said the Justice Department hasn’t found evidence of widespread voter fraud. The Electoral College votes will be formally tallied at a joint session of Congress early next month, and Biden’s inauguration is set for January 20.

Tech crackdown

Tech giants that the EU deems “gatekeepers” could face fines worth up to 10% of annual revenue if they fail to follow antitrust obligations, including not unfairly favoring their own services over competitors. While the draft regulations by the bloc are likely to be revised as they pass through the European decision-making process, the rules signal the direction of travel for regulation of the major internet companies, which are already facing tougher antitrust scrutiny in the U.S. In fact, the Federal Trade Commission is launching a broad inquiry into privacy and data collection practices at Big Tech firms, according to Axios.

Next vaccine rollout

A coronavirus vaccine from Moderna (NASDAQ:MRNA) may shortly join a jab from Pfizer (NYSE:PFE) in being distributed across the country, with the FDA to decide on emergency use as early as Friday. As soon as it gets the green light, the federal government plans to ship just under 6M initial doses, which is more than double the 2.9M shipped by Pfizer this week. Distribution will also be more widespread. Medical supply company McKesson (NYSE:MCK) will obtain the doses from Moderna for packaging and distribution to 3,285 sites nationwide, five times more than those receiving the Pfizer vaccine, while FedEx (NYSE:FDX) and UPS (NYSE:UPS) will still be responsible for sending the doses to their final locations. Many states are also working with CVS Health (NYSE:CVS), Walgreens (NASDAQ:WBA) and other local pharmacies to expand the availability of vaccines to rural areas and other places by the spring.

Oil forecast for 2021

Following OPEC in cutting its forecast for oil demand growth in 2021, the IEA also expects a slower rebound than initially anticipated as the aviation sector takes longer to recover from the pandemic amid border closures and travel restrictions. “It is possible that, after the upcoming holiday season, a third wave of the virus will affect Europe and other parts of the world before vaccines have time to take effect. It will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand.” While the “market remains fragile,” global consumption is expected to be 96.9M barrels per day next year, about 200K bpd below earlier forecasts. However, the IEA still expects that the crude glut left behind by the pandemic will clear by the end of next year as the global economy recovers and OPEC+ keeps a tight rein on supplies.

SPACtacular

“In history books, the year 2020 will forever be known for the deadly pandemic. But from a capital markets perspective, this year will undoubtedly be known as the year of the SPAC,” Goldman Sachs wrote in a fresh research note. That means the next two years are likely to see the ripple effect of this method of capital raising, and could result in $300B in M&A in 2021–22. Why the two year horizon? Special-purpose acquisition companies, or SPACs, are publicly traded shell companies formed to merge or acquire another company (instead of an IPO or direct listing), but need to complete an acquisition within two years or the capital raised must be returned to investors. SPACs have raised a record $70B via 206 offerings this year, a fivefold increase from 2019’s record SPAC tally.

Extent of SolarWinds espionage attack?

Hackers were found to have inserted malicious code into software updates provided by SolarWinds (NYSE:SWI), which services hundreds of thousands of organizations around the world, leading the stock to record a nearly 17% plunge on Monday. The U.S. Commerce Department and Department of Homeland Security confirmed that they were infiltrated, as well as a suggestion that the Treasury Department was hit, but that has not yet been established. What we do know so far: Systems were exposed for as many as nine months, with hackers reading emails and moving around undetected. “SolarWinds currently believes the actual number of customers that may have had an installation of the Orion products that contained this vulnerability to be fewer than 18,000,” according to the company, and while a fix is in the works, at this stage it may be a case of too little too late. Western security experts have also suggested that the hack bears the hallmarks of an espionage operation, with Russia and China key suspects since it was a highly sophisticated attack.

What else is happening…

Boeing (NYSE:BA) widens 787 Dreamliner inspections after finding more defects.

Climate action… Exxon (NYSE:XOM) ramps up emission reduction plans.

Only first 2 seasons of ‘The Office’ will be free on Peacock (NASDAQ:CMCSA).

Google (GOOG, GOOGL) stock holds firm despite big outages.

Amazon-owned (NASDAQ:AMZN) Zoox unveils fully autonomous electric vehicle.

Peloton (NASDAQ:PTON) faces lawsuit over spinning innovations.

FOMC meeting begins
8:30 Empire State Mfg Survey
8:30 Import/Export Prices
8:55 Redbook Chain Store Sales
9:15 Industrial Production
4:00 PM Treasury International Capital

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Good morning. Happy Monday. Hope you had a good weekend.

The Asian/Pacific markets leaned to the upside. Japan, China, Indonesia and Singapore posted gains; New Zealand, Malaysia and Thailand were weak. Europe, Africa and the Middle East are currently doing well. France, Turkey, Germany, Russia, Greece, Hungary, Spain, Italy, Portugal, Austria and the Czech Republic are posting solid gains. Futures in the States point towards a moderate gap up open for the cash market.

————— Online Course: Mini Masterclass in Trading —————

The dollar is down. Oil is up; copper is down. Gold and silver are down. Bonds are down.

Stories/News from Seeking Alpha…

Vaccine rollout

Less than two days after the FDA granted emergency authorization for Pfizer (NYSE:PFE) and BioNTech’s (NASDAQ:BNTX) COVID-19 vaccine, nearly three million doses of the shot have been transported across the country. It’s part of an historic mission to vaccinate more than 100M people by the end of March, with 145 sites in the U.S. poised to receive the vaccine today, and nearly 500 locations set to get their first doses on Tuesday and Wednesday. Five of the first vaccinations will take place at a national ceremonial “kickoff event” scheduled for this afternoon at George Washington University Hospital. Despite dry runs and contingency planning, a lot can go wrong. “Everything has to come together – the packaging, the dry ice, the vials, the material itself. It all has to come together to the same place and have enough of it and exactly the right people there ready to take it,” said Yossi Sheffi, director of the MIT Center for Transportation & Logistics.

Inoculation challenges

According to official guidelines from the CDC, healthcare workers should be the first to get Pfizer’s (PFE) vaccine, alongside people that live and work in long-term care. That group consists of about 24M Americans, which will take up most of the doses that will be produced by the end of the year. The goal is for rest of the U.S. population to be vaccinated by summer 2021, though some hurdles remain. 1) The logistics hurdles mentioned above, 2) 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.

Futures point to another vaccine rally

Hopes for a continuing economic recovery saw cyclicals lead the advance for futures overnight as the U.S. gears up for a historic vaccine rollout. Dow +0.8%; S&P 500 +0.6%; Nasdaq +0.4%. “The vaccine has and will likely continue to provide a tailwind to the market that is allowing investors to look beyond record case levels, hospitalizations and deaths,” said analysts at JPMorgan. On the stimulus front, a bipartisan group of lawmakers is readying a two-part proposal with $908B in pandemic relief, though disagreements remain between the two parties over liability protections for businesses and funding for state and local governments. The best chance for passing a bill would be to attach it to the 12-bill omnibus package Congress must pass by Friday to fund the federal government. It’s a big week: The Federal Reserve will hold its final meeting of 2020 on Tuesday and Wednesday, with any guidance on continued asset purchases watched closely by Wall Street.

Merger Monday

A bout of dealmaking began over the weekend as AstraZeneca (NASDAQ:AZN) bulked up its rare disease portfolio with the $39B purchase of Alexion Pharmaceuticals (NASDAQ:ALXN), marking its biggest acquisition on record. Elsewhere in the pharma sector, GlaxoSmithKline (NYSE:GSK) was reported to be in the race to buy Eidos Therapeutics (NASDAQ:EIDX) by putting in an offer of $120/share, compared to the one already agreed to from BridgeBio Pharma (NASDAQ:BBIO). Other industries also saw increased activity. Educational-software maker Pluralsight (NASDAQ:PS) agreed to a $3.5B sale to Vista Equity Partners, Huntington Bancshares (NASDAQ:HBAN) unveiled an all-stock merger with TCF Financial (NASDAQ:TCF), and Electronic Arts (NASDAQ:EA) announced a $1.2B deal for U.K. videogame company Codemasters, trumping an earlier agreement with rival Take-Two Interactive (NASDAQ:TTWO). Looking ahead, the deals we will see will be “mainly conducted by the large companies that fared well during the COVID crisis and will be larger than normal, on average,” writes SA contributor Baruch Lev.

Hack at the highest level

Multiple federal government agencies, including the U.S. Treasury and Commerce Department, have reportedly had some of their networks breached as part of a global cyber espionage campaign believed to be the work of the Russian government. Staff emails were monitored for months, though the full scope of the hack isn’t yet clear. Sources told Reuters that the breaches were related to a broad campaign that also involved the recently disclosed hack at FireEye (NASDAQ:FEYE), while a Washington Post report suggested the agencies were breached through a network management system called SolarWinds (NYSE:SWI). “The U.S. government is aware of these reports and we are taking all necessary steps to identify and remedy any possible issues related to this situation,” said National Security Council spokesman John Ullyot. SWI -14.8% premarket.

Never-ending Brexit talks

In an unsurprising turn of events, U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed on Sunday to push Brexit trade talks beyond their latest deadline, sending sterling up 1.6% to $1.3431. “Despite the exhaustion after almost a year of negotiations, despite the fact that deadlines have been missed over and over, we think it is responsible at this point to go the extra mile,” the two said in a joint statement after they spoke by phone. Meanwhile, investors continue to dump U.K. investments on fears that Britain may crash out of its Brexit transition period without a trade deal in place. U.K. equity funds have bled $2.4B over the past two months, according to data provider EPFR Global, bringing total outflows since the Brexit referendum in June 2016 to $42B.

Deciding on climate action

Should shareholders vote on a company’s plans to tackle climate change? Unilever (UL, UN) thinks so. The consumer packaged goods giant will let stakeholders decide on its green transition, including reducing emissions to net zero (from sourcing to point of sale) by 2039, 11 years ahead of the Paris agreement deadline, as well as halving the environmental impact of products by 2030. “The economy-wide shift to net-zero emissions will require a greater and deeper level of engagement between companies and their investors about their climate transition plans,” the conglomerate said in a statement. A climate action plan will be shared ahead of Unilever’s annual general meeting on May 5, and the company will then seek a non-binding advisory vote every three years on any “material” changes.

Key test flight aborted

Shares of Virgin Galactic (NYSE:SPCE) opened down 14% in premarket trade after a highly-anticipated weekend test flight ended prematurely as the engine of its SpaceShipTwo vehicle ‘Unity’ did not fully ignite. The spaceflight attempt was the company’s first with the vehicle in nearly 22 months, with its previous mission reaching an altitude of nearly 90 kilometers on a test launch from the Mojave Desert in California. It was also the first of three remaining spaceflight tests the company plans to conduct to complete development of its spacecraft system as it looks to usher in an era of space tourism. Virgin Galactic has about 600 customer reservations on its books, most of which were sold at a price of $200K to $250K per ticket several years ago. Another 400 have expressed an interest in booking tickets to the edge of space when sales fully reopen in 2021.

Back to the office? Google says not so fast

Extending the remote work period for most of its staff due to the coronavirus pandemic, Google (GOOG, GOOGL) has pushed back the planned return to the office by a few months, to September 2021, NYT reports. More importantly, the tech giant is laying out a “series of proposed changes that may substantially alter how its employees and people at other technology companies will work.” In an email to the staff on Sunday night, CEO Sundar Pichai said the company will test the idea of a “flexible workweek” once it is “safe to return to the office” to increase “productivity, collaboration, and well-being.” Under the pilot plan, employees would be expected to work at least three days a week in the office for “collaboration days” while working from home for the others.

What else is happening…

Design refresh? Tesla (NASDAQ:TSLA) announces production shutdown for Model S and X.

Public Storage (NYSE:PSA) names new trustees to board after Elliott takes stake.

Cinemark (NYSE:CNK) eyeing AMC theater locations in case of default – NYP.

Alibaba (NYSE:BABA) fine signals another Chinese push to regulate tech firms.

Germany goes into lockdown on Wednesday, with non-essential stores to close.

Home price growth will rise at slower pace in 2021 – NAR panel.

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