Before the Open (Dec 28-31)

Good morning. Happy Thursday.

Several Asian/Pacific markets were closed. China did well; Australia, Malaysia and Indonesia did poorly. Many Europe, Africa and the Middle East markets were closed too. The UK, France, the UAE, Spain, Belgium and Saudi Arabia were weak. Futures in the States point towards a flat open for the cash market.

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

Stories/News from Seeking Alpha…

An unforgettable 2020

There was no shortage of coronavirus headlines in 2020 and the economic shocks from the pandemic are likely to reverberate for the foreseeable future.

Big government staged a comeback, where it became the norm to supplement employee wages and offer direct payments for their citizens. A big rethink in economics also changed minds about public debt, with federal deficits ballooning as central banks jumped back into the money printing business and interest rates notched record lows.

Shocks hit supply chains across the globe and made businesses and governments even more skeptical on their reliance on China. Things were even tougher on the domestic front. Low-paying work in services, where there’s more face-to-face contact, took a gigantic hit, while higher up the income ladder, remote offices became commonplace. Stocks markets meanwhile returned with a vigor that many thought would take years.

With planes grounded and travel at a near halt, Big Oil felt a real threat that the world was getting serious about the climate. Crude prices shockingly went negative at one point as people stayed home under lockdowns, giving impetus to the phase-out of fossil fuels, while California announced plans to ban the sale of new gasoline and diesel cars by 2035, along with many European countries. Eight oil majors even announced an agreement to apply a common set of “energy transition principles” across their businesses, including a commitment to industry decarbonization, and President-elect Joe Biden promised to rejoin the Paris climate accords.

New Year’s Eve

U.S. stock futures hugged the flatline overnight before the final trading session of 2020, with investors looking to bid farewell to a pandemic-stricken year and pop open the champagne for breakfast. While trading desks will be lightly staffed, the stock market, as well as energy and gold futures, will be open for a full trading session on New Year’s Eve, though the bond market will close up shop a little early at 2 p.m. ET. It’s been a crazy past 12 months for equities, which started the year at records, followed by a bear market, then another record high. The S&P 500 is up 15.5% for the year and the Dow has advanced 6.6%, while the Nasdaq has soared more than 43%. Perhaps even more notable, the small-cap Russell 2000 has gained nearly 19% YTD.

Stimulus checks

The late rise in the market yesterday may be a signal that investors are coming to terms with $600 direct checks being it for now, with cyclicals leading the advance into the closing bell. Senate Minority Leader Chuck Schumer attempted another fast vote on a clean stimulus bill, but Mitch McConnell objected, saying he would not remove election security and Section 230 media reform from his proposal. “The Senate is not going to be bullied into rushing out more borrowed money into the hands of Democrats’ rich friends who don’t need the help,” he declared. With a new Congress set to be sworn in on Sunday, the current push for bigger stimulus checks is running out of time.

Brexit is finally happening

After four and a half years, two general elections and plenty of missed deadlines, Britain is finally closing a chapter on Brexit. The U.K. House of Lords gave the green light to Boris Johnson’s post-Brexit trade deal late Wednesday, just 24 hours before the country’s final split from the European Union. “The destiny of this great country now resides firmly in our hands,” the British prime minister said in a statement. “We take on this duty with a sense of purpose and with the interests of the British public at the heart of everything we do.” There are still several risks for the U.K. in the months and years ahead. Negotiations on service industries have been moving slowly, while border bureaucracy, new paperwork and regulatory cooperation can still cause disruption.

Quarrel over tech taxes

France has resumed collecting what is known as its digital-services tax on U.S. tech giants, with similar levies set to go into effect in Italy and the U.K. Backdrop: In late 2019, France hit companies like Google (GOOG, GOOGL), Amazon (NASDAQ:AMZN), and Facebook (NASDAQ:FB) with a digital tax that equaled 3% of digital revenue for companies with more than €750M in annual sales. In response, the U.S. threatened to put tariffs of up to 100% on $2.4B of French imports, but earlier this year, the parties reached a truce. Response: On January 6, the U.S. will respond with tariffs on $1.3B of French imports, setting up a renewed trade spat over digital taxes for the incoming Biden administration.

Jack Ma crackdown

Earlier this week, the WSJ reported that Chinese regulators were looking to trim the empire of former Alibaba (NYSE:BABA) chairman Jack Ma, who is also the controlling owner of fintech giant Ant Group. Reuters sources now say regulators are looking into the equity investments of Ant Group for any rules violations including anti-monopoly actions. The investments include dozens of companies, mostly in the technology and fintech space. Backdrop: In October, Ma reportedly publicly criticized regulators for stifling innovation, and days later, regulators cancelled the record-breaking $37B Ant Group IPO.

Emotional support animals

Alaska Airlines (NYSE:ALK) will ban emotional support animals from its flights beginning Jan. 11, becoming the first major U.S. airline to do so after the Department of Transportation revised its guidelines earlier this month. “To ensure a safe and accessible air transportation system,” the Air Carrier Access Act now defines a service animal as “a dog that is individually trained to do work or perform tasks for the benefit of a person with a disability.” “This regulatory change is welcome news, as it will help us reduce disturbances onboard, while continuing to accommodate our guests traveling with qualified service animals,” said Alaska Airlines director of customer advocacy Ray Prentice. U.S. airlines have lobbied for the rule change for more than a year, with many questioning whether some passengers may be trying to pass off their pets as support animals to avoid paying associated fees. Example: Delta (NYSE:DAL) charges $125 one-way for pets traveling in the cabin domestically and $200 internationally.

Is linear TV dead?

Not according to the latest statistics from Nielson. Despite recent shifts to digital and streaming platforms, people tuned into scheduled programming this year as they stayed home during the coronavirus pandemic. Not only did COVID-19 make continuous headlines, the news cycle was extremely heavy given the racial justice movement and a contentious presidential election. Fox News Channel (NASDAQ:FOX) topped all news and basic cable ratings for the fifth straight year, averaging 1.9M viewers per day and 3.6M in primetime – record levels for cable news channels. While Fox was ahead in annual key metrics, AT&T’s (NYSE:T) CNN beat the network in total day ratings for the 41 straight days following the election. The channel also recorded its most-watched year in its 40-year history, with an average of 1.1M viewers per day and 1.8M in primetime.

Pandemic publishing deals

Alden Global Capital is the single largest shareholder in Tribune Publishing (NASDAQ:TPCO) with a 32% stake, but the hedge fund is looking to purchase the company outright, WSJ reports. Alden already cemented a firmer position on the Tribune board in July, when it took control of a third seat out of seven, in exchange for a standstill deal that prevents it from increasing its stake or making a hostile bid until after June 2021. A deal would have far-reaching implications for an industry beset by sharp declines in revenue, cost cuts and a wave of consolidation. Between 2008 and 2019, newsrooms in the U.S. shed 51% of their jobs, according to the Pew Research Center, while the pandemic hasn’t made things easier for advertising-based media. Tribune, which owns the New York Daily News, Chicago Tribune and other local papers, has a market value of about $465M. Its shares are little changed this year and closed yesterday at $12.79.

What else is happening…

The same stocks keep making the year’s winners and losers list.

Ending a year-long dispute, Tiffany (NYSE:TIF) shareholders clear LVMH takeover.

Search for new CEO starts at J.C. Penney (OTCPK:JCPNQ).

Exxon (NYSE:XOM) points to another loss with $20B in writedowns.

Today’s Economic Calendar
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
SIFMA close 2:00 PM

—————

Good morning. Happy Wednesday.

The Asian/Pacific markets were mixed. China, Hong Kong, South Korea and Turkey were up; Japan, Indonesia and Thailand were down. Europe, Africa and the Middle East are currently little changed. Turkey and Hungary are up; Poland is down. Futures in the States point towards a slight up open for the cash market.

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

Stories/News from Seeking Alpha…

Another vaccine approval

The coronavirus vaccine being developed by the University of Oxford and AstraZeneca (NASDAQ:AZN) has been authorized for emergency use in the U.K., which has ordered 100M doses of the shot (enough to vaccinate 50M people). The jab is expected to be rolled out next week and would be added to the Pfizer-BioNTech (PFE, BNTX) vaccine that has so far been given to 600,000 people in England. The approval could also accelerate the lifting of strict lockdowns implemented in parts of the country, according to Cabinet Secretary Michael Gove, which effectively canceled Christmas festivities for millions due a new coronavirus variant. AZN +2.6% premarket.

Backdrop: Confusion initially surrounded trial data of the U.K. vaccine in November, which led to some criticism of AstraZeneca. When people were given a half dose, followed by a full measure at least a month after, there was an efficacy rate of 90%, but that fell to an efficacy of 62% when two full doses were given at least a month apart. When all the results were tabulated from the 11,636 participants, the average efficacy of the vaccine worked out to 70%.

Reservations: Chief of the White House’s Operation Warp Speed, Moncef Slaoui, and others in the U.S. have also expressed concern over the age groups in the trial, saying the 90% efficacy was only shown for the lowest risk group, which numbered 2,741 people below age 55.

Advantages: The biggest benefits of the AstraZeneca/Oxford jab are price and storage. It doesn’t need to be kept at ultra-low temperatures and will cost about $4 a dose, compared to the $20 per vial from Pfizer and $33 for Moderna’s (NASDAQ:MRNA) vaccine.

U.S. vaccinations far short of ‘Warp Speed’ target

With only two days remaining in 2020, the U.S. will likely fall short of its goal to vaccinate 20M Americans by the year’s end. Operation Warp Speed planned to provide 40M doses (each vaccine requires two shots) between Pfizer-BioNTech (PFE, BNTX) and Moderna (NASDAQ:MRNA), but according to the latest figures from the CDC, just over 11.4M doses had been distributed since Dec. 13 and only about 2.1M had been administered (the large variance is partly due to a lag in reporting).

What’s going on? COVID-19 vaccine czar, Moncef Slaoui, acknowledged last week that the ramp-up of immunizations “is slower than we thought it would be,” while U.S. Army Gen. Gustave Perna, who oversees logistics for Operation Warp Speed, repeatedly apologized after some state officials reported cuts to their allocations. The launch of the federal government’s partnership with major pharmacy chains like CVS (NYSE:CVS) and Walgreens (NASDAQ:WBA), which will be tasked with vaccinating long-term care residents, is also pending.

Quotes: “I believe that as we get into January, we are going to see an increase in the momentum,” Dr. Anthony Fauci told CNN, saying that he hopes the push will be enough to “catch up to the projected pace that we had spoken about a month or two ago.” “The Trump administration’s plan to distribute vaccines is falling behind, far behind,” President-elect Joe Biden announced at a news briefing, adding his administration would “move heaven and earth” to accelerate distribution once he takes office on Jan. 20.

Bigger picture: The situation is even more imperative after the U.S. confirmed the first case of a new and potentially more infectious strain of COVID-19 recently discovered in U.K. The individual is a male in his 20s, who does not have a travel history, and is currently in isolation in Elbert County, Colorado.

Stimulus commotion in the Senate

“Unless Republicans have a death wish, and it is also the right thing to do, they must approve the $2000 payments ASAP. $600 IS NOT ENOUGH!” President Trump tweeted after Mitch McConnell blocked an attempt from Senate Democrats to approve larger stimulus checks.

Some drama: McConnell later introduced a bill that would boost the size of the checks to $2,000, repeal the Section 230 liability shield for social media companies and create a commission to study election issues. Senate Minority Leader Chuck Schumer responded to the legislation, saying if McConnell “tries loading up” the bill “with unrelated, partisan provisions that will do absolutely nothing to help struggling families across the country,” larger direct payments would not become law. “Any move like this would be a blatant attempt to deprive Americans of a $2,000 survival check.”

Mixing in the defense bill: Sen. Bernie Sanders then followed through on his threat to delay a veto override of the National Defense Authorization Act if McConnell rejected an outright vote on the larger payments. Since the Senate needs unanimous support to move quickly on many issues, any one senator can grind activity to a halt.

On the way: $600 stimulus payments already started going out last night, according to Treasury Secretary Mnuchin, and if Congress approves the increase to $2,000, it will be added to the original sum.

What to watch: Republican Sens. David Perdue and Kelly Loeffler, who are running in crucial Jan. 5 runoffs in Georgia, have also expressed support for bigger checks. The race will determine control of the Senate, and some see it as “the new November” in terms of election volatility risk.

Bitcoin: A look back at a breakthrough 2020

The year kicked off with Bitcoin (BTC-USD) above $7,000, and after a pullback in March due the coronavirus pandemic, the cryptocurrency didn’t look back.

Easy money policies: As people began to face quarantine and lockdowns, businesses went virtual and the cashless society thrived. Governments and central banks across the globe also began implementing unprecedented fiscal and monetary policy to slow the economic damage, but something else was happening in the crypto sphere.

Inflation fears: While trillions of dollars were pumped into the economy, the supply of new Bitcoin being released into circulation began to shrink. In May, the Bitcoin network reached a key technical event – Bitcoin’s third halving – where miners running the Bitcoin software saw their rewards reduced by half, yet the community was celebrating. They championed a decentralized digital asset, with a fixed supply, that was free from monetary inflation or government intervention.

Availability: The summer of decentralized finance also took off, with billions of dollars being locked in DeFi projects, as people around the world began to lend, hedge or make structured bets using Ethereum smart contract powers without the need of any financial middlemen. By October, PayPal (NASDAQ:PYPL) and Venmo rolled out buy, hold and sell services for various cryptocurrencies, making them more accessible to retail users.

Institutional interest: Faced with a declining dollar, MicroStrategy (NASDAQ:MSTR) CEO Michael Saylor became the face of companies looking to convert corporate treasuries into digital gold when the business intelligence firm bought $475M worth of Bitcoin (it later bought another $650M). Square (NYSE:SQ) followed up by buying $50M worth of Bitcoin, while institutional investors began supporting the crypto, including Fidelity, BlackRock (NYSE:BLK) and Citigroup (NYSE:C).

All-time highs: After breaking through resistance at $20,000 in early December, Bitcoin kept going, taking out $25K, $26K, $27K and even $28K. In fact, Bitcoin has soared by nearly 300% in 2020, outperforming the combined gains of gold and the Dow Jones Industrial Average by a factor of 10.

Third Point sends Intel a letter

Activist hedge fund Third Point, led by Daniel Loeb, is pushing Intel (NASDAQ:INTC) to explore strategic alternatives, including whether it should keep chip design and production under one roof, according to Reuters. Shares climbed as much as 6.1% to $49.95 on Tuesday, the most in more than eight months, giving the company a much-needed boost and a market value of more than $200B. The stock has fallen about 21% this year, compared with a 43% rise of the Nasdaq Composite.

What does Loeb want? Amassing a nearly $1B stake in Intel, the activist is pushing for immediate action to boost the company’s position as a major provider of processor chips for PCs and data centers. Were it to gain traction, Third Point’s drive for changes could lead to a big shakeup at Intel, which has been slow to respond to investor calls to outsource more of its manufacturing capacity. It could also lead to the unwinding of some of its acquisitions, like the $16.7B purchase of programmable chipmaker Altera in 2015.

Bigger picture: Intel has lost its pole position in microprocessor manufacturing to Taiwan Semiconductor Manufacturing (NYSE:TSM) and Samsung Electronics (OTC:SSNLF). It’s also losing market share in core PC and data centers to Advanced Micro Devices (NASDAQ:AMD), while Nvidia is dominating computational models used in AI applications (a nascent market in which Intel has been largely absent). Intel customers, such as Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) are additionally developing their own in-house silicon solutions and sending those designs to be manufactured abroad.

Quote: “Without immediate change at Intel, we fear that America’s access to leading-edge semiconductor supply will erode, forcing the U.S. to rely more heavily on a geopolitically unstable East Asia to power everything from PCs to data centers to critical infrastructure and more,” Loeb wrote in the letter.

Response from the company: “Intel welcomes input from all investors regarding enhanced shareholder value. In that spirit, we look forward to engaging with Third Point on their ideas towards that goal.”

What else is happening…

Stock futures rebound on latest vaccine optimism.

Financial firms brace for Brexit’s impact on trading on Jan. 4.

Boeing (NYSE:BA) 737 MAX ‘mostly full’ on its return to U.S. skies.

Apple (AAPL) loses copyright fight against virtual iPhone developer Corellium.

Chinese regulators could take larger stakes of Ant Group and Alibaba (NYSE:BABA).

Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 International trade in goods (Advance)
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
9:45 Chicago PMI
10:00 Pending Home Sales
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
3:00 PM Farm Prices

—————

Good morning. Happy Tuesday.

The Asian/Pacific markets closed mixed. Japan, Hong Kong and New Zealand did well; China and Indonesia were weak. Europe, Africa and the Middle East are currently mostly up. The UK is up big. Poland, Turkey, Russia, South Africa, Finland, Hungary, Austria and the Czech Republic are also doing well. Futures in the States point towards a positive open for the cash market.

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

Stories/News from Seeking Alpha…

Record Highs

More stock records seem to be in store for today, with futures ahead by 0.5%, after the signing of a COVID relief bill that lifted reopening plays like cruise lines, airlines and casinos. Megacaps led the major averages on Monday, while nine of the 11 S&P sectors ended in the green amid continuing support for the Santa Claus rally.

“The market right now is clearly foaming at the mouth,” said Charlie McElligott, a market analyst with Nomura Securities, though the rapid gains seen this year are dividing some investors on how to proceed in 2021. The S&P 500 is up 15.6% for the year and the Dow has advanced 6.5%, while the Nasdaq has soared more than 43% despite the pandemic.

The bears: Ominous parallels have been made between this market and the internet bubble, and a correction could at least be in the cards. Valuations are also stretched beyond memory with margin debt at records, while traditional stock metrics and fundamentals have gone out the window. Runaway shares for recent IPOs like DoorDash (NYSE:DASH), Airbnb (NASDAQ:ABNB) and Snowflake (NYSE:SNOW) could additionally cause some alarm, especially when the companies aren’t profitable and CEOs express bewilderment over their stock prices.

The bulls: Assurance from the Fed that it will continue easy money policies, keeping markets stable and interest rates low. Retails investors, who have piled into the market this year, also seem to be a driving force for the market’s upward trajectory. The contentious presidential election is now over and a national vaccine rollout further signals the start of an eventual return to normal.

Does the old Warren Buffett maxim still hold true? “Be fearful when others are greedy, and greedy when others are fearful.”

All aboard the $2,000 stimulus bandwagon?

The U.S. House of Representatives just passed a bill called the CASH Act of 2020 that would increase the amount of second stimulus checks from $600 to $2,000 after a call from President Trump to increase the payments. That puts him and Congressional Democrats on the same side of an issue, though it remains to be seen if Republicans in the Senate will follow suit. Strange times indeed.

More about the bill: The CASH Act would also boost the amount awarded for each dependent to $2,000 (e.g. a family of four would get an $8,000 second stimulus check instead of a $2,400 payment). It would also include an additional amount for older children, elderly parents that have moved in, or anyone else that one supports and can claim as a dependent on upcoming tax returns. Moreover, the legislation retroactively amends the law authorizing the first round of stimulus checks (under the CARES Act) so that all dependents would qualify for the extra $500 payments allowed for children age 16 and younger.

FAQ: Is the stimulus check taxable income and how will it effect my tax return? The direct payments will not factor into income-tax liability, and won’t influence, offset or factor into the size of your refund.

What will Senate Republicans do? The situation is fluid, so stay tuned for imminent developments. So far, there are some Republican senators who back higher stimulus checks like Josh Hawley (R-Mo.) and Lindsey Graham (R-S.C.), while lawmakers could be pressured by constituents who are struggling financially. President Trump is also behind the effort, which may be enough to trigger support for larger payments.

The options: Senate Majority Leader Mitch McConnell hasn’t said whether the Senate would take up the House bill, make an attempt to vote on a different one that could increase direct payments or simply ignore the legislation. The silence could be interpreted as a lack of support for the House bill due to the price tag of the increased payments, which would cost $464B, according to the Joint Committee on Taxation.

New rules to speed drone adoption

Federal officials have launched new drone rules that could help open the skies for widespread commercial deliveries, allowing operators to fly small drones over people and at night under certain conditions. The regulations will give the FAA and law enforcement a handle on what’s actually flying around in the skies, requiring remote identification technology to pinpoint them from the ground.

Meet the “Remote ID” standard: The new rules eliminate requirements that drones be connected to the internet to transmit location data, but they must broadcast remote ID messages via radio frequency broadcast (meaning they can be used in areas without internet access). Drone manufacturers will have 18 months to begin producing drones with Remote ID, and operators will have an additional year to provide Remote ID.

Other rules: For at-night operations, drones must be equipped with anti-collision lights that can been see for three miles. They must also “not cause injury to a human being that is equivalent to or greater than the severity of injury caused by a transfer of 25 foot-pounds of kinetic energy upon impact from a rigid object” and “does not contain any exposed rotating parts that could lacerate human skin upon impact with a human being.”

Quote from FAA Administrator Steve Dickson: “The new rules make way for the further integration of drones into our airspace by addressing safety and security concerns. They get us closer to the day when we will more routinely see drone operations such as the delivery of packages.”

Stats: Drones represent the fastest-growing segment in the entire transportation sector, with currently over 1.7 million drone registrations and 203,000 FAA-certificated remote pilots.

Some history: UPS (NYSE:UPS) won the government’s first full approval to operate a drone delivery airline back in October 2019, while Alphabet’s (GOOG, GOOGL) Wing became the first company to get certification for a single-pilot drone operation. This past summer, the FAA granted Amazon (NASDAQ:AMZN) permission for delivery trials, while Walmart (NYSE:WMT) jumped into the drone delivery race in September.

737 MAX returns to U.S. skies

For the first time in 21 months, Boeing’s (NYSE:BA) 737 MAX on Tuesday will fly paying passengers in the U.S. via an American Airlines (NASDAQ:AAL) flight that will depart Miami International Airport at 10:30 a.m. ET for New York’s LaGuardia Airport.

What happened: Two fatal crashes that killed 346 people and a scathing report from the U.S. Senate have left some customers skeptical of stepping back on board the jet, so carriers are allowing passengers to change their flights for free if they feel uncomfortable. With the passage of time, Americans are less familiar with the two fatal Boeing 737 MAX crashes, but if they are made aware of those disasters, more than half say they would probably avoid the aircraft, according to a new Reuters/Ipsos opinion poll.

Outlook: It will soon be harder to avoid the plane. By the end of February, 91 daily American flights will be flown by the MAX, according to travel analytics firm Cirium, while United (NASDAQ:UAL), Southwest (NYSE:LUV) and Alaska Airlines (NYSE:ALK) will resume service in the first quarter. Brazilian carrier Gol, which operates an all-Boeing 737 fleet, was the first airline to relaunch the jets earlier this month.

While the return of the MAX comes at a time when the coronavirus pandemic has thrust the aviation industry into its worst crisis, a recovery in air travel may benefit Boeing, as well as other industrial stocks. The 737 MAX planes, which are more fuel-efficient than previous models, are central to the plans of airlines around the world, with more than 3,000 of them on order.

Boom, boom, boom…

Ant Group is going marching, not to get out of the rain, but to avoid a regulatory crackdown in China that seeks to rein in Jack Ma’s online finance empire. Bloomberg reports that the company is planning to fold its financial operations into a holding company that could be regulated more like a bank, potentially crippling the growth of its most profitable units due to additional capital restrictions.

Bigger picture: Any unit that will require a financial license would be moved into the holding company, including wealth management services, consumer lending, insurance, payments and MYbank, an online lender in which Ant is the largest shareholder. “This means China is still trying to encourage domestic consumption, and they need platforms like Ant to help with consumer loans,” said Wang Zhen, a Shanghai-based analyst with UOB-Kay Hian Holdings. “The key is that consumer lending shouldn’t be over-leveraged.”

Backdrop: Ant was poised for a public listing in November that would have valued it at more than $300B. Regulators then intervened and scuttled world’s largest IPO amid reports that founder Jack Ma criticized the Chinese government for tightening financial regulation. Beijing has also opened an antitrust probe into Alibaba for monopolistic practices.

On the move: Shares of Alibaba (NYSE:BABA), which owns a third of Ant, appear to be getting some relief on the news, climbing 4% to $230/share in premarket trade. It follows a near 30% tumble since the stock hit a high of $319.32 at the end of October.

What else is happening…

U.K. will likely approve AstraZeneca’s (NASDAQ:AZN) coronavirus vaccine today.

Novavax (NASDAQ:NVAX) starts late-stage COVID-19 vaccine trial in U.S.

Qualtrics files for IPO two years after sale to SAP (NYSE:SAP).

Biden calls for modernizing cyber defenses after SolarWinds (NYSE:SWI) breach.

Travel rebound? JPMorgan (NYSE:JPM) acquires major credit card rewards business.

Today’s Economic Calendar
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
1:00 PM Results of $59B, 7-Year Note Auction

—————

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

The Asian/Pacific markets leaned to the upside. Japan, India, Taiwan and Indonesia rallied more than 1%, while Hong Kong and Thailand were weak. Europe, Africa and the Middle East are currently doing well. Denmark, Poland, France, Germany, Greece, Finland, Switzerland, Norway, Hungary, Portugal, Austria and the Czech Republic are up 1% or more. 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. Bitcoin is up big.

Stories/News from Seeking Alpha…

Santa brings stimulus checks

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.

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.

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.

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.”

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.

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.

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 (GBTC), Riot Blockchain (NASDAQ:RIOT), Marathon Patent (NASDAQ:MARA) and Bitwise 10 Crypto Index Fund (BITW).

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.

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.

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 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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2 thoughts on “Before the Open (Dec 28-31)

  1. I seldom short the market. Today Monday the market is up. I am buying enough SQQQ in all of the portfolios I manage to neutralize a drop in the market. We are 2 months since my last buy signal. The average is 2 months but has gone 5. Biden has pledged to increase the capital gains taxes for next year so there might be a panic sell off mid week. I don’t think Trump is quite ready to give up his office. I am not sure what or if he will do anything but it will not be good for the markets. Some other news could come out to crash the markets. I am most willing to forgo any gains that would be reaped over the next few weeks.

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