Before the Open (Feb 1-5)

Good morning. Happy Friday.

The Asian/Pacific markets closed mostly up. Japan, South Korea, Taiwan, Australia, Indonesia, Thailand and the Philippines all did well. China and Hong Kong were weak. Europe, Africa and the Middle East currently lean up. Poland, France, Russia, South Africa, Spain, Italy, Portugal, Saudi Arabia and the Czech Republic are doing well; the UAE and Finland are down. Futures in the States point towards a positive open for the cash market.

————— VIDEO: Entering Trades with Moving Averages on Shorter Time Frames —————

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…

Robinhood removes GameStop limits

Robinhood removed trading restrictions on all stocks, including GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC), as trading volume on the two stocks – and their prices – have subsided this week. GameStop shares have plunged 84% this week while AMC lost 47% as retail traders turned their attention elsewhere. The move comes a day after the platform increased limits in buying the two stocks.

Vaccine emergency use applications

Pfizer (PFE) has withdrawn an application in India for emergency use authorization of the COVID-19 vaccine it developed with BioNTech (NASDAQ:BNTX), Reuters reported. That decision followed a meeting with the country’s drugs regulator, which had been declining to accept the EUA without a small trial on safety and immunogenicity for Indians. In the meantime, since Pfizer applied for the EUA, India has given authorization to two much cheaper vaccines that applied later: from Oxford/AstraZeneca (NASDAQ:AZN) and from Bharat Biotech/Indian Council of Medical Research.

In the United States, Johnson & Johnson (NYSE:JNJ) has applied to the FDA for emergency use authorization for its single-shot COVID-19 vaccine. If approved, it would be the third such vaccine to get an emergency OK from the Food and Drug Administration, joining the vaccines from Pfizer/BioNTech and Moderna. Last week, Johnson & Johnson’s vaccine was found to be 66% effective in protecting against the virus in a global trial.

The vaccine is eagerly anticipated, as the single-shot regimen points toward a far simpler distribution path than that of the vaccines from Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA), each of which calls for two shots given weeks apart. The J&J vaccine will also ship at 36-46 degrees Fahrenheit, vs. Pfizer’s ultra-cold shipping (-112 to -76 degrees) or Moderna’s (-13 to 5 degrees).

Tencent Music choosing banks for $5B Hong Kong IPO within year

Tencent Music Entertainment (NYSE:TME) – the online music arm of China’s Tencent Holdings (OTCPK:TCEHY) – has reportedly selected banks to help lead a planned listing in Hong Kong for up to $5B, to come within the year. JPMorgan Chase (NYSE:JPM) and Morgan Stanley (NYSE:MS) have been chosen to lead the offering, and more banks could join, according to media reports. Tencent Music raised $1.1B in its U.S. IPO in late 2018, and has nearly doubled its value since – but a Hong Kong listing would take advantage of a hot capital market.

Google makes publisher peace in Australia

Google (GOOG, GOOGL) has negotiated deals with seven Australian publishers and launched a news platform in the region featuring content the tech giant paid to use. The platform is an expansion of Google’s News Showcase, which launched in Brazil and Germany last year An Australian News Showcase launch had been planned for last June, but Google halted the release when Australian legislators moved to make it a legal requirement for tech firms to pay publishers for content. With the News Showcase launch, Google is hoping to show that legislation isn’t needed to strike deals.

Go Deeper: Google had previously called the legislation “unworkable” and threatened to pull its search product from the region. Microsoft capitalized on the problem, offering its Bing search product to fill the void.

What else is happening…

Teradata (NYSE:TDC) shares soar after cloud focus drives Q4 beats, upside profit view.
Richard Branson SPAC VG Acquisition (NYSE:VGAC) pops 31% on 23andMe merger.
Rivals Blackstone (NYSE:BX), GIP team for $4.7 billion Signature Aviation (OTCPK:BBAVF) purchase.
Regulatory authorities initiate rolling review of Novavax’s (NASDAQ:NVAX) COVID-19 vaccine.

Thursday’s Key Earnings
GoPro (NASDAQ:GPRO) -11% AH after revenue falls short of expectations.
Gilead Sciences (NASDAQ:GILD) +2.5% AH on strong Q2 earnings, dividend hike.
Ford Motor (NYSE:F) +0.9% AH after Q4 earnings beat.
Activision Blizzard (NASDAQ:ATVI) +8.4% AH as holidays deliver double-digit bookings gains.
Snap (NYSE:SNAP) -7.5% AH on light profitability guidance.
Unity Software (NYSE:U) -10.5% AH as revenue outlook lacks upside.
Pinterest (NYSE:PINS) +9.8% AH after 76% revenue growth, 37% user growth.
Peloton Interactive (NASDAQ:PTON) -8% AH after warning on keeping up with demand.

Today’s Economic Calendar
8:30 Non-farm payrolls
8:30 International Trade in Goods and Services
1:00 PM Baker-Hughes Rig Count
3:00 PM Consumer Credit


Good morning. Happy Thursday.

The Asian/Pacific markets leaned down. Japan, China, Hong Kong, South Korea, New Zealand, Australia and Singapore were weak. The Philippines, Indonesia and India did well. Europe, Africa and the Middle East currently lean up. Russia, Spain, Italy, South Africa and Saudi Arabia are doing well while the UAE and Portugal are weak. Futures in the States point towards a positive open for the cash market.

————— VIDEO: Entering Trades with Moving Averages on Shorter Time Frames —————

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

Stories/News from Seeking Alpha…

Going big on stimulus

The Biden administration is moving full speed ahead on a $1.9T coronavirus economic relief plan after House Democrats adopted a budget resolution that would enable a bill to pass with a simple majority (VP Kamala Harris would cast a tie-breaking vote). Despite a public debt load of $27T, the consensus stance from the Democratic camp is not making the case for fiscal restraint at this stage in the recovery. Stocks have been buoyed by the stimulus efforts in recent days, with the major averages set to open in the green for the fourth straight session.

New thinking in economics? The idea here is that with interest rates at essentially zero, any growth seen from the measures will pay back the borrowing, while it would cost the economy more if the government does not go through with the spending. Economic policymakers from Treasury Secretary Janet Yellen to Fed Chair Jay Powell have also urged the administration to “act big,” believing in the long run that the “benefits will far outweigh the costs.” Republicans meanwhile want something more targeted and are seeking to ensure the funding from Congress’ most recent stimulus package is fully spent first. Their bill also doesn’t include state and local aid, paid sick leave, a $15 minimum wage and expansion to the child tax credit.

Flashback: Biden likely remembers President Obama’s first term in office, when he spent much time trying to secure GOP support for additional stimulus measures during the global financial crisis. Obama pushed for a $1T stimulus package, or roughly 25% bigger than the record-setting legislation that ultimately got through Congress, though this time around, the Republican plan is less than a third of Biden’s $1.9T proposal.

While President Biden has signaled some areas of compromise, and met with GOP senators over a smaller $600B offer, he won’t ditch an overall package for the sake of bipartisanship. “Time is a luxury our country does not have,” Senate Majority Leader Chuck Schumer said before moving forward with the budget process. Some concessions may be seen with stimulus checks, and Biden has indicated the direct payments could be sent to a smaller group of Americans. Previous checks were given to citizens making under $75,000 per year, but that is now likely to be reduced to $50,000, which would cut the total price tag of the COVID aid bill.

Vaccine cocktail

Given the scarce supplies across the world, a new vaccine trial being launched in the U.K. will explore whether using different coronavirus jabs works for first and second doses. The trial, led by the University of Oxford and run by the National Immunisation Schedule Evaluation Consortium, will last for 13 months and recruit 820 participants over the age of 50. It’s being backed by £7M of government funding from the Vaccine Taskforce, which was set up by the U.K. last April to research and produce a coronavirus vaccine.

Quote: “If we do show that these vaccines can be used interchangeably in the same schedule this will greatly increase the flexibility of vaccine delivery, and could provide clues as to how to increase the breadth of protection against new virus strains,” said Matthew Snape, chief investigator on the trial and associate professor in Paediatrics and Vaccinology at the University of Oxford.

The trial will specifically examine the immune responses of an initial dose of Pfizer’s (NYSE:PFE) vaccine followed by a booster of AstraZeneca’s (NASDAQ:AZN) – and vice versa – with intervals of 4 and 12 weeks. Researchers will measure antibody and T-cell responses, as well as monitor for any unexpected side effects.

Go deeper: The biggest advantages of the AstraZeneca/Oxford shot are price and storage. It does not need to be kept at ultra-low temperatures and costs about $4 a dose, compared to the $20 per vial from Pfizer and $33 for Moderna’s (MRNA) jab. A vaccine milestone was also seen yesterday as the number of global inoculations surpassed the total number of confirmed cases of COVID-19.

EVs and chip shortages

There’s a lot of rumblings in the auto sector, especially surrounding EVs and a chip shortage that’s hitting the industry. Strong demand across the U.S. and China continue to be received favorably by investors, triggering a broad rally yesterday across the EV landscape. According to data from Edmunds, EV sales in in the U.S. climbed 4% Y/Y in 2020, outperforming the auto market (down 15% Y/Y), mostly from the introduction of the Model Y. Tesla (NASDAQ:TSLA) also extended its sector domination with 79% of all BEV (battery electric vehicle) sales. Other happenings:

Apple Car – Reports suggest the company is close to finalizing a deal with Hyundai-Kia to manufacture an Apple-branded autonomous electric vehicle at the Kia assembly plant in West Point, Georgia. The vehicle would go into production in 2024 and would be designed to operate without a driver and focused on the last mile (delivery, robotaxis?). “Smartphones are a $500B annual TAM (total addressable market). Apple has about one-third of this market. The mobility market is $10T. So Apple would only need a 2% share of this market to be the size of their iPhone business,” wrote Morgan Stanley analyst Katy Huberty.

Rivian – A year and a half after announcing it would buy 100K Rivian electric trucks to reduce its carbon footprint, Amazon (NASDAQ:AMZN) has begun using prototype vehicles for deliveries in Los Angeles. The e-commerce giant plans to expand its testing to 15 more cities this year as part of a broad goal to be net zero carbon emissions across its operations by 2040. Rivian is meanwhile looking to start production by the end of this year and shake up the market in 2022 and beyond.

Chip crunch – Ford (NYSE:F), Toyota (NYSE:TM) and Stellantis (NYSE:STLA) have already idled some plants due to a shortage of semiconductors, and General Motors (NYSE:GM) is joining them in taking production offline for a week. The downtime was scheduled at four assembly plants, including three in North America, though GM hasn’t revealed how much volume it expects to lose or which supplier was directly affected. “Despite our mitigation efforts, the semiconductor shortage will impact GM production in 2021,” spokesman David Barnas said in a statement.

Tensions Down Under

Australia’s Prime Minister Scott Morrison has finally spoken with Alphabet (GOOG, GOOGL) CEO Sundar Pichai amid friction over the country’s media bill that was introduced in December. The legislation would force digital platform companies to pay for news content in feeds or search results, meaning Google would have to shell out cash to local media outlets and publishers for linking to their content. In response, Google has threatened to shut its search engine in Australia and has been lobbying strongly against the proposal.

Transcript from the call: “I thought it was a constructive meeting,” said Morrison. “I have been able to send them the best possible signals that should give them a great encouragement to engage with the process and we discussed some of the specifics of elements of the code. But at the end of the day, they understand that Australia sets the rules for how these things operate. And I was very clear about how I saw this playing out.”

If the law were to pass, Facebook (NASDAQ:FB) has also threatened to stop allowing Australians to share local and international news on the social network and Instagram. “The proposed law is unprecedented in its reach… and would force Facebook to pay news organizations for content that the publishers voluntarily place on our platforms and at a price that ignores the financial value we bring publishers,” the company last said in a blog post.

Go deeper: Standing to gain from the fallout, Microsoft (NASDAQ:MSFT) has slammed Google for threatening to leave the country and offered to fill the gap left by the exit with its own search engine – Bing. “We believe that the current legislative proposal represents a fundamental step towards a more level playing field and a fairer digital ecosystem for consumers, business, and society,” Microsoft President Brad Smith declared. To put it in perspective, Google has more than 94% of the search market in Australia, while Bing has less than 4%.

What else is happening…

Pot play: Jazz (NASDAQ:JAZZ) to acquire GW Pharma (NASDAQ:GWPH) for $7.2B.

Shell (RDS.A, RDS.B) raises dividend despite sharp profit drop.

Incoming Amazon (AMZN) CEO set to beef up presence in videogames.

Google (GOOG, GOOGL) seeks FAA approval to test fire-fighting drones.

Wednesday’s Key Earnings
eBay (NASDAQ:EBAY) +10.3% AH on Q4 beats, strong guidance.
PayPal (NASDAQ:PYPL) +5.1% AH doubling down on crypto.
Qualcomm (NASDAQ:QCOM) -8% AH as sales came up short.

Today’s Economic Calendar
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Productivity and Costs
10:00 Factory Orders
10:30 EIA Natural Gas Inventory
1:00 PM Fed’s Kaplan Speech
2:00 PM Fed’s Daly Speech
4:30 PM Money Supply
4:30 PM Fed Balance Sheet


Good morning. Happy Wednesday.

The Asian/Pacific markets did well. Japan, Hong Kong, South Korea, India and Australia led, while China was weak. Europe, Africa and the Middle East currently leans to the upside. Denmark, Germany, Finland, Spain, Italy and Austria are doing well; Saudi Arabia is down. Futures in the States point towards a positive open for the cash market.

————— VIDEO: Entering Trades with Moving Averages on Shorter Time Frames —————

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

Stories/News from Seeking Alpha…

Bezos bows out

Amazon (NASDAQ:AMZN) posted record revenues of more than $125B for the fourth quarter after the closing bell on Tuesday, up a whopping 44% Y/Y on holiday and pandemic-driven demand, but the biggest news wasn’t the ringing of the register. CEO Jeff Bezos said he would step aside later this year, though he would remain engaged at Amazon as executive chairman. Andy Jassy, the head of the company’s cloud division, will take the helm of the e-commerce giant in the third quarter.

Although Bezos’ departure was announced last year, Amazon consumer boss Jeff Wilke officially made his exit last month and was considered the number two at the company. Jassy is also an Amazon veteran (he’s been with Bezos since 1997) and was the architect of Amazon Web Services, which is how Amazon makes most of its money. In the most recent quarter, AWS had net sales of $12.7B with an operating income of $3.6B, more than half of the firm’s overall operating income. AWS also has a market share of around 34%, according to Synergy Research Group.

Why is Bezos taking a back seat? “Being the CEO of Amazon is a deep responsibility, and it’s consuming,” he declared, saying it was time to focus on some of his passion projects and philanthropic ventures. Those include The Washington Post newspaper and private space company Blue Origin (BORGN), as well as his Day One Fund and the Bezos Earth Fund. Bezos, aged 57, founded Amazon from his garage in Seattle in 1994, eventually expanding the company to dominate industries like online retail, groceries, streaming, cloud computing and artificial intelligence.

Outlook: Trading volatility was seen after-hours, before Amazon shares ended the session slightly lower, as investors digested the news. Amazon also said sales in Q1 would be between $100B-$106B, a slowdown from the fourth quarter, but an increase of between 33% and 40% from a year earlier, and expects coronavirus-related costs to decelerate after several months of heavy investments. Amazon additionally revealed the design of its 350-foot-tall “HQ2” in Virginia, which features spiraling outdoor walkways and was dubbed the Helix.

Alphabet earnings boost Nasdaq

U.S. stock index futures are moving into the green for a third day, powered by strong tech earnings, stimulus progress and a broader vaccine rollout. Nasdaq is leading the pack, with contracts linked to the index ahead by 0.7%, on strong quarterly results from Amazon and Google. While CEO Jeff Bezos said he would step down, leading AMZN shares to decline modestly, Alphabet (GOOG, GOOGL) soared over 7% AH. The tech giant blew through forecasts with an ad spending recovery, and broke out operating income from its cloud business for the first time, with a loss that showed the business is still in investment mode.

Other happenings: The White House confirmed plans to hike weekly vaccine supplies to 11.5M doses, distributing doses directly to up to 40,000 pharmacies. Over in the Senate, the chamber voted 50 to 49 in a straight party-line decision to begin the budget reconciliation process, which would open the door for Democrats to push through the COVID rescue package on their own. The move would avoid the filibuster that requires 60 votes for most legislation, although President Biden did meet with a group of Republican senators on Monday and expressed willingness to agree to some modifications.

Funds also appear to be flowing back into traditional names, with meme stocks losing a total of $167B in market capitalization following another brutal selloff on Tuesday. Things aren’t looking better premarket: GameStop (NYSE:GME) -5%; AMC Entertainment (NYSE:AMC) -5%; BlackBerry (NYSE:BB) -4%.

What’s next for the WSB/Reddit crowd? Barstool Sports founder Dave Portnoy pulled out of the trade yesterday with a $700K loss, though others like Mark Cuban aren’t convinced the action has run its course. What seems to be the biggest problem is the collective unity needed to band together retail traders on an anonymous platform. Once rumors get out, users become suspicious of each other or bail on a stock, a trade can break down within a session.

Yellen convenes the regulators

Although the “meme stock” trade continues to unwind, discussions over market volatility continue to ensue. Treasury Secretary Janet Yellen has called a meeting with the SEC, the Federal Reserve Board, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission to address the recent market frenzy involving GameStop (NYSE:GME) and Robinhood. This comes after the SEC said it was investigating “manipulative trading activity,” as well as actions taken to “unduly inhibit the ability to trade certain securities.”

Fine print: Yellen has requested an ethics waiver to hold the meeting after receiving more than $700,000 in speaking fees from Citadel Advisors, the financial empire run by Ken Griffin. Griffin also runs a hedge fund and controls Citadel Securities, a market maker that executes trades for Robinhood.

What could happen? Likely nothing, but if the SEC were to act, it could pursue a series of rules, ranging from short interest caps to taxing short-term bets, according to BofA analyst Michael Carrier. The commission may also move to review payment for order flows (PFOF) and pursue social media oversight to ward off potential market manipulation. Jefferies analyst Daniel Fannon meanwhile thinks the SEC could explore greater investor education around derivatives and risk management or increase costs for leverage services.

This is all taking place while the SEC operates under temporary leadership. The eventual confirmation of Gary Gensler, President Biden’s pick for the agency, is a virtual certainty, but it could take weeks or months for the Senate to approve him. Right now, the chamber is focusing on Biden’s cabinet-level nominations, coronavirus relief and a possible impeachment trial for President Trump.

Deeper dive into how trades are settled

A topic that has gotten lots of attention on Wall Street over the last few days is a requirement that stocks be physically deposited in an account within two days of making a transaction – a process known as “T+2.” During that time, brokers have to post collateral to the Depository Trust & Clearing Corp. because equity prices can fluctuate over those 48 hours, and the lag can make sure everything turns out alright. Some buyers are also using margin and sellers can be tapping borrowed shares, so the requirement could help prevent brokers from getting burned before the transactions settle.

Backdrop: For many years, markets operated on a “T+5” settlement cycle, when security transactions were done manually. In the 1990s, the SEC shortened the settlement cycle to three business days, which reduced the amount of money that needed to be collected at any given time. It was only in 2017 that the commission moved to T+2, calling the previous standard an outdated “settlement cycle” due to improvements in technology, emerging new products and growing trading volumes.

Latest argument: Given our current lightning-fast systems, many market participants say two days is too long to settle trades. “Moving the industry closer to T+1 settlement is good for everyone because the less risk we maintain in the system, the better off everyone is,” said Shane Swanson, former director of equity market structure at Citadel Securities. Some are even calling for instant settlement, like Robinhood (RBNHD) CEO Vlad Tenev, who had to put up some big funds this week to cover the trading frenzy on his platform.

“There is no reason why the greatest financial system the world has ever seen cannot settle trades in real time. Doing so would greatly mitigate the risk that such processing poses,” Tenev wrote in a blog post. “Technology is the answer, not the oft-cited impediment. We believe it is important for all relevant stakeholders to convene in the near term to discuss the urgency and necessity of this issue.”

What else is happening…

Mario Draghi may be Italy’s next prime minister.

SpaceX (SPACE) test flight ends with fireball on landing.

Kia Motors shares soar on EV tie-up with Apple (NASDAQ:AAPL) – Reuters.

Reports suggest Kraft Heinz (NASDAQ:KHC) may sell Planters for $3B.

Today’s Economic Calendar
Auto Sales
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Fed’s Kashkari Speech
9:45 PMI Composite Final
10:00 ISM Service Index
10:30 EIA Petroleum Inventories
1:00 PM Fed’s Bullard: U.S. Monetary and Economic Policy
2:00 PM Fed’s Harker Speech
5:00 PM Fed’s Mester Speech
5:00 PM Fed’s Evans: U.S. Economic Conditions and Monetary Policy
6:05 PM Fed’s Kaplan Speech


Good morning. Happy Tuesday.

The Asian/Pacific markets posted big gains. Japan, China, Hong Kong, South Korea, India, Taiwan and Australia and rallied more than 1%. Europe, Africa and the Middle East are currently mostly up. Denmark, France, Turkey, Germany, the UAE, Russia, Greece, Norway, Spain, Austria and the Czech Republic are up 1% or more. Futures in the States point towards moderately big gap up open for the cash market.

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

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

Stories/News from Seeking Alpha…

Big Tech earnings on tap

Tech continues to lead the charge on Wall Street to start the week, with the Nasdaq closing up 2.6% on Monday and futures pointing to another 1% gain at the open. The move higher follows the WSB/Reddit trader disruption, which saw the market log its worst week since October. New catalysts appear to be on the horizon as the last of the FAANGs report earnings after today’s closing bell.

Alphabet (GOOG, GOOGL) – Supported by a recovery in digital ad spending during the holiday season, the tech giant is likely to top $50B in Q4 sales. Other areas of Alphabet’s business have also been growing strongly, including Google’s Cloud business, Search and YouTube. While these are all positive signals, analysts will also be listening closely for commentary on policy developments. Google recently removed Parler from the Play Store, and it will have to deal with upcoming privacy changes being instituted by Apple (and may even unveil its own).

“Our checks with SEMs [search engine marketers] suggest search spending accelerated from 3Q to 4Q,” said JPMorgan analyst Doug Anmuth. “Certain verticals heavily affected by COVID-19, including travel that we believe represented 10-15% of search revenue prior to the pandemic, likely remained challenged throughout 4Q given resurgence and related shutdowns. We believe recovery in these verticals will happen through ’21 as consumers continue to get vaccinated, driving further acceleration in ad revenue.”

Amazon (NASDAQ:AMZN) – An accelerating shift to online shopping will bolster results, especially over “Prime Day” and the holiday shopping season. The e-commerce behemoth is set to report its first-ever quarter doing more than $100B in revenue, bringing full-year 2020 revenue to an astounding $379B, with additional support from the AWS powerhouse. Also be on the lookout for some major expenses. Amazon has earmarked more capital for worker safety during the pandemic and pledged to pour more money back into the company to sustain its growth rate.

“Thematic data points we have gathered throughout 2020… collectively point to consumers globally becoming increasingly comfortable purchasing online every day as opposed to every now and then,” Credit Suisse analyst Stephen Ju declared. “These factors amount to the following near to long-term potential implications for Amazon: 1) upside to GMV [gross merchandise value] estimates in 2021 and beyond, and 2) moderating customer acquisition/retention costs as greater purchase frequency reinforces Amazon/Prime brand.”

Not performing, but transforming

Ugly Q4 results from BP (NYSE:BP) sent shares of the energy giant down 5% in premarket trade as the coronavirus pandemic weighed on demand and slammed earnings. Underlying replacement cost profit, used as a proxy for net profit, fell 96% Y/Y to $115M vs. an expected $360M. For the full year, BP slumped to a loss of $5.7B, its first in a decade, driven by the collapse in energy prices and weaker refining margins, as well as fragile gas marketing, trading results and asset/exploration writeoffs.

“2020 will forever be remembered for the pain and sadness caused by COVID-19. Lives were lost – livelihoods destroyed. Our sector was hit hard as well. Road and air travel are down, as are oil demand, prices and margins,” said CEO Bernard Looney, who started in his role last February.

Backdrop: After cutting its dividend in August for the first time since the Deepwater Horizon disaster in 2010, BP returned to a profit in the third quarter. Crude prices and energy demand recovered, but fresh government-imposed lockdowns and travel bans triggered BP to warn of a volatile outlook and cut 10,000 jobs. It will likely become known as the “worst year in the history of oil markets,” according to the International Energy Agency.

Outlook: Looking to move past the gloom, Looney has described 2020 as a “pivotal year” for the company, but the “toughest of his career.” He has pledged to turn BP into a net-zero emissions company by 2050 by selling assets and reshaping its business for a lower-carbon future. In order to accomplish that goal, BP has already slashed capital spending by billions of dollars, cut costs dramatically, secured new credit lines, issued bonds and stalled exploration activity. The (once) oil major also wants to sell $25B in assets by 2025 to slash debt and fund its green energy push.

Robinhood secures billions in cash

All the volatility in financial markets is having Robinhood (RBNHD) shore up its finances. The brokerage has tapped investors for $3.4B in cash over the past few days, a significant amount of money for a firm that was valued at about $12B just a few months ago.

What’s the cash for? Robinhood CEO Vlad Tenev detailed a 3:30 a.m. call last week from its clearinghouse that asked the brokerage to put up a staggering $3B. “This was obviously nerve-wracking,” he told Elon Musk during an interview on audio platform Clubhouse. Eventually, the company was able to lower the bill to $700M after putting limitations on certain stocks. Despite all of this, the company realized it was in desperate need of cash, in case similar things happen in the future, so it went to existing investors like Ribbit, Sequoia, Index Ventures and ICONIQ Capital.

Note: Dave Portnoy is still trolling Vlad on Twitter after the latter said the company did not have a “liquidity problem.” Vlad says the move was “done preemptively.”

Outlook: Raising $3.4B in a matter of days may be a bullish signal from investors in the free-trading app, but the debt does not come free. It’s structured as convertible debt, which can be swapped for discounted shares when the company goes public, but those plans may be on the back burner right now. If Robinhood does eventually go public at a lower valuation – many are angry at the recent trading restrictions – servicing the debt could be fairly expensive for the company. Existing investors, however, look at the infusion as a chance to double down on one of the fastest-growing fintech companies in the world.

Is the saga over when they make a movie about it?

Separate film projects are now in development about the past week’s WSB/Reddit phenomenon on Wall Street, according to Deadline. Netflix (NASDAQ:NFLX) is in talks with Mark Boal – the Oscar-winning screenwriter of The Hurt Locker and Zero Dark Thirty – for a movie that would include Noah Centineo, while MGM has landed rights to a book proposal by Ben Mezrich about the GameStop trading frenzy.

Bigger picture: Media companies generally move quickly to secure directors and a cast to discourage competition. Similar stories in the past have included the collapse of Silicon Valley startups like WeWork and Theranos, as well as the Michael Lewis bestseller The Big Short. That movie, which told the story of traders who foresaw the financial crisis of 2008, grossed $70M at the domestic box office and was nominated for five Academy Awards.

While some say the David vs. Goliath battle between hedge funds and WSB/Reddit traders is still playing out, the latter appears to be on the back foot after a major plunge on Monday. GameStop (NYSE:GME) shares tanked 31% and are down another 24% premarket, while AMC Entertainment (NYSE:AMC) was able to end the day flat, but is off 23% in early trade.

Go deeper: Another interesting event was the silver trade, which was initially seen as another WSB/Reddit theme, before word started getting out that it was a “false squeeze.” According to data compiled by Bloomberg, Citadel Advisors owned about 6M shares of the iShares Silver Trust (NYSEARCA:SLV) as of Sept. 30, equivalent to a 0.93% stake, and the hedge fund holds shares in at least 17 other silver companies and ETFs. In premarket movement this morning: First Majestic Silver (NYSE:AG) -12%, Pan American Silver (NASDAQ:PAAS) -7%, Coeur Mining (NYSE:CDE) -12%. Coordinated efforts may have limited effectiveness on an anonymous forum and tactics may have to switch to sustain the highly speculative trading strategy.

First civilian crew to space

In one small step for private citizens, SpaceX (SPACE) has announced plans for the world’s first all-civilian mission. It’s being targeted for the fourth quarter of 2021 and will be commanded by Shift4 Payments (FOUR) CEO Jared Isaacman, who is an accomplished pilot.

Bigger picture: The expedition, known as Inspiration4, is part of a charity initiative to raise money for St. Jude Children’s Research Hospital. In addition to giving $100M to St. Jude, Isaacman said he’ll donate the three other seats in the Dragon spacecraft to crew members who “represent the mission pillars of leadership, hope, generosity and prosperity.”

Other details: The mission will launch from the Launch Complex 39A at NASA’s Kennedy Space Center in Florida and will be carefully monitored at every step by SpaceX mission control. Isaacman and the Inspiration4 crew will undergo commercial astronaut training by SpaceX on the Falcon 9 launch vehicle and Dragon spacecraft, including a specific focus on orbital mechanics, operating in microgravity, zero gravity and other forms of stress testing.

Interest in space has been growing at an exponential rate, especially in the public markets. Space-related names took off last month after ARK Invest said it was launching a space ETF, while Virgin Galactic (NYSE:SPCE) soared 21% yesterday after announcing a new flight window for a “rocket-powered test of its SpaceShipTwo Unity.” The stock, which has climbed nearly 200% over the past year, is up another 11% premarket to $59.75.

What else is happening…

Google (GOOG, GOOGL) shuts down internal Stadia game development.

Another case of mistaken identity: Clubhouse Media (OTCPK:CMGR).

Forecasts for frigid February lift natural gas prices.

Boeing (NYSE:BA) at risk of losing a third of 777X orders – SEC filing.

AT&T (NYSE:T) enters $14.7B loan with BofA to fund spectrum spending spree.

Tech isn’t topping amid Reddit mania, says Wedbush, still has 25% to go.

Today’s Economic Calendar
Auto Sales
8:55 Redbook Chain Store Sales
1:00 PM Fed’s Kaplan Speech
2:00 PM Fed’s Mester Speech


Good morning. Happy Monday.

The Asian/Pacific markets posted big gains. Japan, China, Hong Kong, South Korea, India, Taiwan, Indonesia and the Philippines all did great. Europe, Africa and the Middle East are currently posting solid gains. The UK, Poland, Denmark, France, Turkey, Germany, the UAE, Finland, Switzerland, Hungary, the Netherlands, Italy, Israel, Austria, Sweden and the Czech Republic are up 1% or more. Futures in the States point towards a big gap up open for the cash market.

————— VIDEO: A Shameful and Disgusting Week on Wall Street —————

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

Stories/News from Seeking Alpha…

Hi-ho, Silver! Away!

The market moving power of amateur traders is continuing into the new week as the WSB/Reddit crowd turns their on sights silver after pumping up shares of GameStop (GME) and other heavily shorted stocks. COMEX silver prices are up 11.2% to $29.92/oz., the highest level since mid-August, following a 6% jump last week that boosted silver mining firms. On Friday, almost $1B already flowed into iShares Silver Trust (NYSEARCA:SLV), the world’s largest ETF backed by silver, according to fund sponsor BlackRock (NYSE:BLK).

U.S. bullion broker Apmex has also disclosed a 1-3 day delay in processing silver transactions, while Money Metals and SD Bullion warned of unprecedented demand. Some on Wall Street were already positive on silver’s outlook as part of a broad upswing in raw materials, with Goldman Sachs calling last week for a $30/oz. price target. Others, like analysts at Commerzbank, see the latest retail frenzy “not lasting all that long.”

Premarket: First Majestic Silver (NYSE:AG) +40%, Pan American Silver (NASDAQ:PAAS) +17%, Coeur Mining (NYSE:CDE) +23%. Elsewhere, COMEX gold is up 1% to $1868.20/ounce, while palladium is 3.7% higher.

Bigger picture: This squeeze here is aimed at banks by forcing physical delivery of silver into vaults. The Silver Trust ETF is backed by physical silver, meaning the precious metal needs to be purchased when new investments are received. However, retail traders may find it harder to influence silver prices, compared to a single stock, given the large off-exchange market for the precious metal in which banks trade on behalf of clients.

Flashback: In 1979-80, the Hunt brothers attempted to corner the silver market by buying up one-third of the entire world supply (other than that held by governments). Within a year, the price for silver jumped 713% to a record high of $49.45 per troy ounce, but later collapsed in an event called “Silver Thursday.” COMEX adopted “Silver Rule 7,” which placed leverage restrictions on the purchase of commodities on margin, and the Hunt brothers had borrowed heavily to finance their purchases.

Recovering from the worst week since October

Traders appear to be getting some more clarity on the trades that will be allowed this week after uncertainty over the transactions led to the market’s worst week since October. Robinhood has limited stock restrictions to eight companies (users can still only buy one share of GameStop), while Interactive Brokers reopened trading in options for the volatile WSB/Reddit names. Flows that were also pulled from brokerages last week due to angst over restricted trading may also be coming back into the market, and futures are reflecting the renewed optimism: Dow +0.7%; S&P 500 +0.9%; Nasdaq +1.1%.

Analyst commentary: “The week’s events may have turned markets on their heads, but fear indicators imply that we may have seen the worst of the degrossing,” Jefferies wrote in research note. Barclays added that it’s unlikely the ongoing short squeeze in a few stocks by retail investors has raised concerns of a broader contagion. “While we believe there is more pain to come we remain optimistic that it is likely to remain localized.”

What else to watch: Stimulus is reentering the discussion, giving another boost to equities, as President Biden meets with the Republican lawmakers today to discuss proposals (see below). Another week of earnings is meanwhile on tap, with Thursday set to be the busiest day of the season. 99 S&P companies are set to report, including Alphabet (GOOG, GOOGL), Amazon (AMZN), Alibaba (BABA), Ford (F), Snap (SNAP), Exxon (XOM), Pfizer (PFE) and UPS (UPS). There will also be a bevy of economic data, ending with the January jobs report that will be published Friday.

Alternative COVID relief package

A group of 10 Republican senators led by Susan Collins of Maine is pitching a new coronavirus relief plan with a $600M price tag, less than a third the size of the Biden administration’s $1.9T proposal. The GOP said their plan is more targeted, offering smaller paychecks to fewer Americans and stripping out a measure that would have raised the minimum wage, but includes additional unemployment benefit extensions.

Bigger picture: The low offer increases the likelihood that Democrats will seek to bypass Republicans to fund their proposal, and could further weigh on further cooperation between the two sides. A similar scenario was seen in 2020, when both parties were trillions of dollars apart for months, but only came together just before the Senate runoff election in Georgia. Biden has said the aid package is his top legislative priority and indicated he would pass it without bipartisanship support if needed.

Quote: “We have a virus crisis; we have an economic crisis. We have to get shots in people’s arms. We have to get the schools reopened so that parents can go back to work. And we need to provide direct relief to families and businesses across the country who are really struggling here,” said National Economic Council Director Brian Deese.

Biden will meet with the Republican senators at the White House this afternoon to discuss the alternative proposal, but also needs to get his party on board for the $1.9T stimulus package. Democrats have a narrow majority in the Senate – with VP Kamala Harris casting a tie-breaking vote – meaning Biden will require support from deficit-hawk Democrats from conservative states, like West Virginia’s Joe Manchin and Montana’s Jon Tester.

Consolidation in the oil and gas industry?

A report from the WSJ over the weekend suggested that the CEOs of Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) talked about a combination of the companies after the COVID pandemic took hold last year. The outbreak decimated oil and gas demand and put enormous financial strain on both firms. While the discussions were described as preliminary and aren’t ongoing, sources say they could come back in the future.

Statistics: The combined company’s market value could top $350B and reshape the oil industry. Together, they would produce about 7M barrels of oil and gas a day, based on pre-pandemic levels, second only in both measures to Saudi Aramco. Only a handful of industry deals were completed last year, including Chevron’s $5B takeover of Noble Energy and ConocoPhillips’ (NYSE:COP) $10B takeover of Concho Resources.

Outlook: A merger of XOM anc CVX would be one of the biggest deals ever, but would likely face regulatory and antitrust concerns. Combining the oil majors would also reunite the two largest descendants of John D. Rockefeller’s Standard Oil monopoly, which was broken up by U.S. regulators in 1911. Furthermore, President Biden has said climate change is one of the biggest crises facing the country and he would push for a “transition away from the oil industry.”

Exxon is scheduled to report earnings on Tuesday, with a conference call at 9:30am EST.

GameStop squeeze: Is there a case for market manipulation?

Statement from the SEC: “The Commission is closely monitoring and evaluating the extreme price volatility of certain stocks’ trading prices over the past several days to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate capital formation.”

“The Commission is working closely with our regulatory partners… to ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing. The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.”

“In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws.”

Bigger picture: While the SEC is just fact-finding now to see if anyone broke the law, the choice of words may suggest several parties are currently under the spotlight. That includes the WSB/Reddit crowd pumping highly shorted (and other) stocks, the extreme leverage of hedge funds, brokerages that halted trading to “closing positions only,” as well as the opaque dealings of the market makers.

Will the regulatory efforts bear fruit? Even if potential defendants are identified, successful litigation against alleged individual market manipulators would be difficult for the SEC, said Duke Law School Prof. Gina-Gail S. Fletcher. The legal definition of “market manipulation” requires a showing that someone created “a false or misleading appearance of active trading,” according to the Securities Exchange Act of 1934, and a bunch of people on Reddit saying they want to shoot a certain stock to the moon is probably not illegal. Courts are looking for fraud and misinformation, she added, but with GameStop (NYSE:GME), you have “irrational exuberance but don’t seem to have a lot of fraud.”

Bottom line: “I think they’re going to struggle with it,” Fletcher declared. “They don’t really do a whole lot of market manipulation enforcement and it’s a really hard crime to prove. The statutory provisions and the case law related to it are all over the place and they don’t favor the SEC.”

What else is happening…

Melvin Capital lost 53% in January on GameStop (GME) and bad positions.

Forget GameStop: Sports betting plays could have long-term value.

U.S. warns Myanmar as military seizes power in coup.

Moderna (NASDAQ:MRNA) looks to increase number of COVID vaccine doses per vial.

Today’s Economic Calendar
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
2:00 PM Fed’s Bostic Speech
3:15 PM Fed’s Rosengren Speech


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