Before the Open (Feb 8-12)

Good morning. Happy Friday.

The Asian/Pacific markets were mostly closed. Japan moved up; Australia moved down. Europe, Africa and the Middle East currently lean down. Denmark, the Netherlands and Hungary are up; Poland, Russia, Norway, Portugal and Austria are down. Futures in the States point towards a negative open for the cash market.

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

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

Stories/News from Seeking Alpha…

Disney streaming success

Shares of Disney (DIS) rose 1.6% AH on Thursday after its fiscal first-quarter earnings easily topped profit expectations, on revenues that didn’t decline as much as feared. The results are the first since a divisional reorganization, which makes clear that softer declines in media and entertainment helped mitigate a huge drop in its parks and products business. Disney’s streaming service, Disney+, also continues to be a big hit. It now has 94.9M paid subscribers, topping an expected 90.7M, with 8M new viewers added in December alone.

Putting it in perspective: The figure means Disney has already crossed its original 90M subscriber goal for the platform, which is a number it originally expected to take four years to reach. The Mouse House has since revised that four-year plan with a new target of reaching between 230M-260M subscribers by 2024.

The news was still not enough to offset the hardship the company is experiencing due to the pandemic, with COVID-related costs shaving $2.6B from parks’ operating income in the latest quarter. Walt Disney World in Florida and Shanghai Disney Resort were open for the entire period, though operations at Disneyland were suspended despite declining coronavirus cases in California. Disney traditionally makes a lot of money from its theme parks and movies, and that, in effect, is subsidizing its big bet on streaming.

Thought bubble: While analysts have said Disney trades at a massive 74x earnings – a valuation similar to cloud computing giants and EV makers – investors have bought into Disney’s streaming push. Including ESPN+ and Hulu, the Mouse House has nearly 150M subscribers, and it’s only been a little over a year since Disney+ launched in November 2019. That level of unprecedented growth has excited shareholders, even though the business is loss-making now and will likely be for years to come.

Record trading volumes

While stock index futures dipped slightly overnight, down 0.2% at the time of writing, the major averages are still on track to post a positive week at record levels. A strong rally has taken hold of the market since the beginning of February, before traders take off for Presidents’ Day on Monday. The parabolic surge and rapid collapse of GameStop (GME) and other WSB/Reddit shares have also done little to dampen enthusiasm for equity exposure.

In fact, the frenzy is competing with the trading levels seen during the worst of the pandemic selloff last March. According to Bloomberg, an average 15.8B shares have traded each day on all U.S. exchanges over the last 20 days. That compares with the 16.1B average hit on March 25, which was the highest in at least over a decade. The number of bullish bets via call options has additionally hit a record.

Primary culprit in the overall increase in volumes? Retail. Average daily volumes of the largest e-brokers are way up, as well as options trading that have been prevalent among the retail crowd. Record volumes are also being reported on the Trade Reporting Facility, a “tape” which reports trades not done on the exchanges.

Outlook: Many are still asking when the activity will take a breather. “Everybody has said it’s going to subside, but they have been saying that for six months,” said Steve Sosnick, Chief Strategist at Interactive Brokers.

Embracing crypto

Bigger financial institutions are embracing Bitcoin (BTC-USD), paving the way for large-scale adoption. The crypto jumped as high as 8.1% to $48,663 on Thursday, notching a new record, after Mastercard (MA) and Bank of New York Mellon Corp. (BNY) moved to make it easier for customers to use cryptocurrencies. Galaxy Digital chief Mike Novogratz said this development is huge, but the flow of good news for Bitcoin has been so great of late that it’s going nearly unnoticed.

Backdrop: On Tuesday, Tesla (TSLA) invested $1.5B in Bitcoin and announced it would begin accepting the crypto for payment “in the near future.” There were also some earlier signals. Last week, Elon Musk said he thought Bitcoin “was on the verge of broad acceptance” and added the Bitcoin hashtag to his bio on Twitter. In January, Tesla further disclosed it might hold some of its cash reserves in “certain alternative reserve assets including digital assets, gold bullion [and] gold exchange-traded funds.”

Twitter (TWTR) has additionally done some “upfront thinking” about how to deal Bitcoin, including if employees ask to be paid in the crypto and whether the firm needs to have the digital asset on its balance sheet. Twitter CEO Jack Dorsey, who is also the co-founder of Square (SQ), has been a long-time advocate of Bitcoin.

Quote: “These are just the early innings of corporate adoption, as digital currencies are beginning to play a larger role in robust balance sheet management,” said Nathan Cox, Chief Investment Officer at Two Prime, an investment firm specialized in digital asset and derivative strategy management.

Addressing the chip shortage

The global semiconductor shortage that has hit many U.S. industries, especially the auto sector, has got the attention of the Biden administration. An executive order will be signed in the coming weeks to authorize supply chain reviews for critical goods like silicon chips.

Quote: “The review will be focused on identifying potential chokepoints in the supply chain and actively working alongside key stakeholders in industry and with our trading partners to do more now,” White House press secretary Jen Psaki said in a statement. It will also explore “immediate actions we can take, from improving the physical production of those items in the U.S. to working with allies to develop a coordinate response.”

The chip industry has said the semiconductor crunch points to the need for more investment in U.S. manufacturing and research, and is hoping for government incentives to pump billions of dollars into that effort. On Thursday, a group including Intel (INTC), Qualcomm (QCOM) and Advanced Micro Devices (AMD) even sent a letter to President Biden. They urged him to provide “substantial funding for incentives for semiconductor manufacturing” as part of his economic recovery and infrastructure plans, citing the decline of the U.S. share of global chip-making in recent decades.

Go deeper: Earlier in the day, Biden urged Congress to move quickly on a large infrastructure improvement plan, declaring that China is poised to “eat our lunch” otherwise. “They’re investing billions of dollars dealing with a whole range of issues that relate to transportation, the environment and a whole range of other things. We just have to step up.”

Deficit and inflation fears?

The federal budget deficit is estimated to total $2.3T in the 2021 fiscal year, according to the Congressional Budget Office, marking a drop from the $3.1T shortfall seen in fiscal 2020, but significantly ahead of anything the U.S. had recorded prior to the coronavirus pandemic. That total also does not include the $1.9T in relief spending that President Biden has promised, since the ultimate size of the package has not been finalized.

The public share of the $27.9T national debt is currently to $21.8T, or 102% of GDP. The CBO anticipates that number will continue to escalate, hitting $35.3T, or 107%, of GDP by 2031, which would be the highest debt-to-GDP ratio in U.S. history. All this spending has triggered some inflation fears, though Philly Fed President Patrick Harker is the latest central bank official to say there is nothing to worry about.

Quote: “What I look at is not only the level of inflation but also is it accelerating or decelerating,” he declared. “We’re clearly committed as [a Federal Open Market Committee] to exceed 2% for a period of time, but it has to be sustainably above 2% for a period of time.

Outlook: The U.S. hasn’t seen significant inflation in almost 40 years, and since the 2008 financial crisis, the economy has experienced very low inflation and even deflation. A moderate level of inflation occurs naturally in a growing economy, yielding higher prices that encourage businesses to invest, interest rates to go up and higher wages. The Fed has said will tolerate inflation levels higher than 2% to juice the economy and get back to full employment, but if the number rises at a faster rate, it could be harmful for investors and force the central bank to tighten policy sooner than expected.

What else is happening…

Dating app Bumble (NASDAQ:BMBL) climbs as much as 85% in market debut.

Marijuana stocks continue burnout following likely short squeeze.

GameStop (NYSE:GME) didn’t cash in on squeeze because of regulatory fears.

White House set to meet virtually with airline CEOs.

Biden announces deal for another 200M doses of COVID-19 vaccines.

Today’s Economic Calendar
10:00 Fed’s Williams Speech
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
3:00 PM Fed’s Daly Speech


Good morning. Happy Thursday.

Many of the Asian/Pacific markets were closed. India was up; Thailand was down. Europe, Africa and the Middle East currently lean up. Denmark, Poland, Germany, Greece, Finland, Hungary and the Netherlands are leading. Futures in the States point towards a positive open for the cash market.

————— VIDEO: How to Enter Trades With Technical Indicators —————

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

Stories/News from Seeking Alpha…

Something is bumbling

Another glitzy IPO will begin trading today as a strong streak continues for stocks and the public markets. Bumble, the hot app which requires women to reach out first in hetero dating situations, will open on the Nasdaq under ticker symbol “BMBL.” It’s worth more than $8B, based on a higher-than-expected share price of $43, while the company increased the number of shares it sold to as many as 57.5M.

Background: Bumble was founded in 2014 by CEO Whitney Wolfe Herd, who was also behind the development of Tinder, but she left the dating app earlier that year due to growing tensions with some company executives. She later filed a lawsuit against Tinder for sexual harassment and subsequently started female-focused dating app Bumble. Another court fight broke out in 2018 after Bumble rejected a $450M acquisition offer from Match Group (MTCH), which had filed a lawsuit against it alleging intellectual property infringement. Bumble counter-sued two weeks later, accusing Match of fraud and trade secrets theft, and both lawsuits were dropped the same year.

Parent company Bumble Inc. also owns the Europe-focused dating app Badoo. More than 40M users visit the apps each month to connect with prospective matches. Bumble has 12.3M monthly active users as of Sept. 30, while Badoo has 28.4M monthly active users, according to Sensor Tower data. For the nine months ended Sept. 30, Bumble had a pro forma net loss of $28M attributable to owners and shareholders on revenue of $413M.

Note: Blackstone (BX) acquired a majority stake in Bumble in November 2019 at a $3B valuation. The investment firm will own 82.5% of combined voting power in Bumble after the IPO, while Wolfe Herd will have 14.4%, according to the prospectus.

China strategy?

President Biden has held his first telephone call with China’s Xi Jinping since taking office in January as tensions remain high between the leaders of the world’s two largest economies. In fact, it was the first call between a U.S. president and Xi since the latter spoke with President Trump in March 2020. Since then, relations between the two countries have sunk to their worst level in decades, with Trump blaming China for the coronavirus pandemic.

Biden started the meeting by prioritizing a free and open Indo-Pacific and voicing concerns about China’s “coercive and unfair economic practices.” He also addressed Beijing’s “crackdown in Hong Kong, reported human rights abuses in Xinjiang, and increasingly assertive actions in the region, including toward Taiwan.” In response, Xi warned a confrontation would be a “disaster” for both nations and the two sides should re-establish the means to avoid misjudgments. Xi also noted that Hong Kong, Xinjiang and Taiwan were matters of “sovereignty and territorial integrity” and hopes the U.S. will deal with them cautiously.

Thought bubble: Under the Trump administration, the U.S. launched a trade war against China, as well as export controls, entity lists and executive orders against firms perceived to be security threats. China also failed to meet its 2020 targets under the Phase One trade agreement, buying just under 60% of the $172B worth of goods it was supposed to purchase. Biden has recently touted what he said was his friendship with the Xi, but gave a harsher assessment on the campaign trail last year, calling him a “thug” who “doesn’t have a democratic bone in his body.” He’s likely to maintain pressure on China (no quick lift for tariffs), but via a more multilateral approach.

Meet the task force: On Wednesday, Biden also unveiled a new Defense Department team aimed at assessing the U.S. military’s defense policy toward China. “That’s how we’ll meet the China challenge and ensure the American people win the competition in the future,” he declared during his first visit as commander in chief to the Pentagon. The 15-member panel will “look at our strategy and operational concepts, technology, and force posture.”

Global semiconductor shortage

General Motors (NYSE:GM) became the latest automaker yesterday to warn about a chip shortage, saying the semiconductor crunch could cut its earnings by $1.5B-$2B in 2021. It’s not alone. Many companies across multiple industries have been flagging the problem in recent months, such as AMD (NASDAQ:AMD) and Qualcomm (NASDAQ:QCOM), which sell chips to most of the top electronics firms, or Sony (NYSE:SNE), which blamed the shortage for why it’s so hard to get a PS5.

What’s going on? The COVID-19 pandemic triggered a surge in demand for PCs and other electronics as remote work and online learning became the new normal. Demand still remains at highs. In December, the Semiconductor Industry Association said global chip sales would grow 8.4% in 2021 from 2020’s total of $433B (up from 5.1% growth between 2019 and 2020). Other reasons include shifting semiconductor models that have created a bottleneck among outsourced chip factories, as well as effects from the years-long trade war with China.

Go deeper: Many top semiconductor companies are now “fabless,” meaning they only design the chips and the technology inside of them. Other companies, known as foundries, are contracted to actually make the chips, such as TSMC (NYSE:TSM) in Taiwan and Samsung (OTC:SSNLF) in South Korea. The shift to outsourcing has had a big effect on structural changes and related capacity (i.e., if a company cut orders in the early days of the pandemic, they had to go to the back of the line).

“We need more chips and we need more jobs,” CNBC’s Jim Cramer said on Mad Money. “Why not kill two birds with one stone? It’s time for our government to invest in building the biggest and best complex of semiconductor foundries in the world.” To put it in perspective, even if a “$0.10 chip is missing, you can’t sell your $30,000 car,” added Gaurav Gupta, semiconductor analyst at Gartner. Another problem for automakers is that they generally use “just-in-time” production, which avoids having to stock extra parts in storage.

Net-zero emissions

Under enormous pressure to speed up its response to climate change, the oil and gas industry is accelerating plans away from fossil fuels. Royal Dutch Shell (RDS.A, RDS.B) has become the latest to outline its hastened timeline, unveiling near-term and long-term plans to transition to cleaner energy.

The goal: Cutting net carbon emissions by between 6% to 8% by 2023 when compared to 2016 levels. It climbs to 20% by 2030, 45% by 2035 and 100% by 2050. Previously, Shell only committed to reducing its net carbon emissions by at least 3% by 2022, 30% by 2035 and 65% by 2050. Shell also announced schemes to boost the use of nature-based carbon offsets, like forestation projects, and carbon capture and storage technology, to compensate for emissions.

Quote: “Our accelerated strategy will drive down carbon emissions and will deliver value for our shareholders, our customers and wider society,” Royal Dutch Shell CEO Ben van Beurden said in a statement. “We must give our customers the products and services they want and need – products that have the lowest environmental impact. At the same time, we will use our established strengths to build on our competitive portfolio as we make the transition to be a net-zero emissions business in step with society.”

Shell’s total carbon emissions might have already peaked. The oil major said total carbon emissions maxed out in 2018 at 1.7 gigatons per annum and confirmed total oil production did the same in 2019.

Cannabis stocks light up

Marijuana names are again higher this morning as the Reddit forum WallStreetBets turns its attention to the sector. Cannabis stocks were already having a party since the beginning of February, given Jazz Pharmaceuticals’ (NASDAQ:JAZZ) $7.2B deal for medical cannabinoid firm GW Pharma (NASDAQ:GWPH) and Tilray’s (NASDAQ:TLRY) pact to distribute medical cannabis products in the U.K. Canopy Growth’s (NYSE:CGC) fiscal Q3 revenue beat also helped boost sentiment, while Senate Majority Leader Chuck Schumer unveiled plans to put forward and advance “comprehensive cannabis reform legislation.”

Latest movement premarket: Tilray (TLRY) is ahead by 10% following a 51% surge on Wednesday. Others are tacking on more big gains like OrganiGram Holdings (OGI) +15%; AdvisorShares Pure Cannabis ETF (YOLO) +13%, Aurora Cannabis (ACB) +11%, Cronos Group (CRON) +10%, Aphria (APHA) +9%, Global X Cannabis ETF (POTX) +9% and HEXO (HEXO) +5%.

Analyst commentary: “It seems that institutional investors are finding pathways to access the U.S. cannabis opportunity despite U.S. operators’ shares being traded on the CSE and US OTC markets with relatively limited liquidity,” wrote Stifel GMP analyst Andrew Partheniou. “In addition, it seems the perceived risk profile stemming from the conflict between federal and state laws, which has also narrowed the availability of custodians that deal in the industry, has not deterred investor enthusiasm.”

What else is happening…

Fed’s Powell stays dovish, calls for more fiscal action.

TikTok sale to Walmart (NYSE:WMT), Oracle (NYSE:ORCL) is shelved – WSJ.

Space race… China joins UAE in successful mission to Mars.

AstraZeneca’s (NASDAQ:AZN) COVID-19 jab recommended by WHO for adults over 18.

Microsoft (NASDAQ:MSFT) made an approach to buy Pinterest (NYSE:PINS) – FT.

Wednesday’s Key Earnings
Coca-Cola (NYSE:KO) -0.2% giving a cautious outlook.
General Motors (NYSE:GM) -2.1% amid chip shortage, EV transition headwinds.
Teva Pharma (NYSE:TEVA) -6.9% despite an earlier climb on upbeat earnings.
Uber (NYSE:UBER) -4.8% AH as the pandemic hit core operations.

Today’s Economic Calendar
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
1:00 PM Results of $27B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet


Good morning. Happy Wednesday.

The Asian/Pacific markets did well. China and Hong Kong posted big gains; Taiwan, Australia and Malaysia were up moderately. New Zealand was weak. Europe, Africa and the Middle East is currently quiet. Greece, South Africa and Switzerland are up; Denmark is down. Futures in the States point towards a moderate gap up open for the cash market.

————– VIDEO: How to Enter Trades With Technical Indicators —————

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

Stories/News from Seeking Alpha…

Amazon vs. Union

Nearly 6,000 employees at an Amazon (NASDAQ:AMZN) warehouse just outside of Birmingham, Alabama, called BHM1, began a vote this week to unionize their facility, marking the first such significant effort by Amazon workers in the U.S. The retail giant has been fighting hard against the endeavor with anti-union posters, a dedicated website launch and holding mandatory meetings during work hours, but a group of more than 70 investors has written a letter asking the company to stop interfering with the vote and remain neutral. They have cited worker rights to unionize, FT reports, as well as possible negative effects on Amazon’s reputation among customers.

Do they have enough influence? The shareholders, including the comptrollers for the state of New York and New York City and BMO Global Asset Management, only hold a collective $20B in shares of Amazon, which itself has a market capitalization of $1.7T. However, many of them have a political presence that might be more far-reaching than the size of their investments. Besides a growing call that workers should have representation, issues surrounding Amazon like tax payments, government subsidies and antitrust concerns are becoming hot topics across the country. Amazon also has one of the quickest growing workforces in the U.S., hiring more than 500,000 people since the pandemic began a year ago.

Backdrop: Some of the motivations for the union go back to common criticisms of working conditions at the e-commerce behemoth, like how often employees have to carry out certain tasks and the length of breaks. Other complaints cover disciplinary actions, lack of communication and inexperienced managers. The reason why an attempt is being made in Alabama is due to the state’s “right-to-work” law, which means a union only has to win over 50% backing of the returned vote to be unionized.

If the effort succeeds, it would give workers the power to negotiate a contract that could lock in heavy changes to wages and working conditions. Workers at BHM1 are able to cast mail-in ballots through March 29, though the motion could also inspire other Amazon warehouses to organize. In a statement, Amazon said it “respects our employees’ right to join or not join a labor union, but we don’t believe this group represents the majority of our employees’ views. We encourage anyone to compare our overall pay, benefits, and workplace environment to any other company with similar jobs.”

‘Larger than one account’

Some choppy trading ensued following Twitter’s (TWTR) Q4 results on Tuesday, though shares closed at $61.92, up 3.5% in after-hours trading. Revenues rose nearly 28% to a record $1.29B in the fourth quarter, with “better than expected performance across all major products and geographies,” said CFO Ned Segal. Net income jumped to $222M from a year-ago income of $119M, while total ad revenue was up 31% year over year.

Fine print: Monetizable user growth (a.k.a the eyeballs that see ads on Twitter) slowed for a second straight quarter, a statistic Twitter blamed on policy enforcement changes introduced before the U.S. presidential election. It further projected low-double digit growth throughout the rest of 2021, down from recent figures that saw users spend more time online due to the pandemic.

Twitter also noted that despite “the unusual circumstances” in Q1 (suspension of President Trump?), the increase in “average absolute mDAU” through the end of January was above the average of the last four years. “We are a platform that is obviously much larger than any one topic or any one account,” Twitter CEO Jack Dorsey declared on an earnings call, adding that 80% of its audience is outside the U.S. Twitter expects to see mDAU growth of approximately 20% Y/Y in the first quarter.

Kaepernick jumps aboard the SPAC train

Colin Kaepernick is taking his activism to the wide world of SPACs, or blank check companies which raise money through an IPO so that they can buy or merge with another firm. He’ll serve as co-chair of Mission Advancement Corp., which will focus on racial justice and diversity issues and seek to raise up to $287.5M. The SPAC is specifically targeting consumer businesses with an enterprise value of more than $1B that “delivers a significant impact financially, culturally and socially.”

“Todays’ consumers live in a highly connected and digital world and they often interact with brands across multiple media channels. Consumers respond to brands that build an emotional connection, as when they are buying a product, in many ways, they are buying ‘a story,’ reads an SEC filing. “In this environment, businesses can no longer afford to be faceless entities.”

Bigger picture: Mission Advancement will be co-chaired by Jahm Najafi, who runs the private equity firm Najafi Companies and is a minority owner in the NBA’s Phoenix Suns. Together, they lead a board that is 100% Black, Indigenous and people of color, and is majority female. Directors include Google marketing executive Attica Jaques, former Apple executive Omar Johnson and Birchbox CEO and co-founder Katia Beauchamp.

Bit of history: After Kaepernick’s NFL career ended in 2016, he took his activism to the corporate world. He has been a prominent endorser for Nike (NKE) and struck a partnership with Disney (DIS) to produce content surrounding the social issues. He has also worked with global brands like Netflix (NFLX), Beats by Dre (AAPL), Medium, Electronic Arts (EA), Audible (AMZN) and Ben & Jerry’s (UL).

Annual vaccine shots

People may need to get vaccinated against COVID-19 annually over the next several years, Johnson & Johnson (JNJ) CEO Alex Gorsky told CNBC, meaning the jabs could become like seasonal flu shots. Other public health officials and infectious disease experts have said there is a high likelihood that Covid-19 will become an endemic disease, meaning it’ll always be present in the population, but circulating at lower rates, while others think we may have to “live with the virus forever.”

Quote: “Unfortunately, as [the virus] spreads it can also mutate,” Gorsky declared. “Every time it mutates, it’s almost like another click of the dial so to speak where we can see another variant, another mutation that can have an impact on its ability to fend off antibodies or to have a different kind of response not only to a therapeutic but also to a vaccine.”

Backdrop: Last week, Johnson & Johnson became the third vaccine maker to apply for emergency use authorization from the FDA. The jab is being hailed as a game changer due to its single-dose regimen and ability to be stored at 36-46 degrees Fahrenheit for at least three months. J&J’s candidate is 72% effective in the U.S. and 66% effective overall at preventing moderate to severe COVID-19, 28 days after vaccination, and 85% effective in preventing severe forms of COVID-19.

Meanwhile, the number of Americans willing to get a COVID vaccine is increasing, according to a new study from the CDC. As of September 2020, only 39.4% of adult Americans said they were absolutely certain or very likely to get vaccinated, but that number increased to over 49% by December as drugs were granted emergency authorization by the FDA.

What else is happening…

Playboy returns to Wall Street via SPAC deal.

Electric vehicle maker Rivian aims for IPO in 2021.

Mortgage demand drops with interest rates at three-month high.

Chesapeake Energy (CHKAQ) exits Chapter 11; trading begins today.

Fidelity moves beyond mutual fund roots with actively managed ETFs.

Tuesday’s Key Earnings
Canopy Growth (NYSE:CGC) +11.9% on robust sales, seeing profit in 2022.
Cisco Systems (NASDAQ:CSCO) -4.5% AH showing infrastructure platform weakness.
DuPont (NYSE:DD) -3% warning on Q4’s most improved segment.
Lyft (NASDAQ:LYFT) +11.5% AH as cost cuts offset pandemic pressures.

Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Consumer Price Index
10:00 Atlanta Fed’s Business Inflation Expectations
10:00 Wholesale Inventories (Preliminary)
10:30 EIA Petroleum Inventories
1:00 PM Results of $41B, 10-Year Note Auction
2:00 PM Jerome Powell Speech
2:00 PM Treasury Statement


Good morning. Happy Tuesday.

The Asian/Pacific markets closed mixed. Japan, China, Taiwan, Malaysia and the Philippines moved up; New Zealand, Australia and Indonesia moved down. Europe, Africa and the Middle East currently lean down. Saudi Arabia is doing well, but Greece, Spain, Italy, Portugal and Austria are weak. Futures in the States point towards a down open for the cash market.

————— Online Course: Jason Leavitt’s Masterclass in Trading —————

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

Stories/News from Seeking Alpha…

Stimulus shot in the arm

Global stock markets are still in an upbeat mood after U.S. benchmarks set fresh records yesterday. Investors have renewed confidence that a new round of stimulus spending will bolster the U.S. economy, while upbeat earnings from large U.S. multinationals have calmed some of the anxiety over the manic GameStop-Reddit trading. More than 80% of companies that have reported results so far have beaten consensus expectations.

In Asia, The Shanghai Composite Index rose 2.0% and Hong Kong’s Hang Seng increased 0.5%, while the Nikkei 225 in Tokyo gained 0.4% to 29,418.23. European stocks are mixed with the Stoxx 600 off 0.3%. Oil markets continue to rally, with Brent crude futures up 0.5% and WTI Crude futures 0.3% higher. The yield on the 30-year U.S. Treasury bond is 1.93% after it briefly pushed past the 2% level for the first time since February of last year when the pandemic disrupted debt markets. In crypto world, Bitcoin (BTC-USD) blew past the $47K level as the Tesla (NASDAQ:TSLA) investment sparks broader interest.

U.S. stock futures are down slightly ahead of the open. Intriguing earnings reports due out today include updates from DuPont (NYSE:DD) on free cash flow, Twitter (NYSE:TWTR) on potential subscription offerings and Lyft (NASDAQ:LYFT) on efforts to set up a delivery business.

Huge deal in gaming

Electronic Arts (NASDAQ:EA) is set to buy Glu Mobile (NASDAQ:GLUU) in a deal that will offer a big expansion to EA’s player network of half a billion-plus. The all-cash deal values Glu at $2.1B in enterprise value, with Glu shareholders catching a 36% premium to Friday’s closing price. The merger means a mobile portfolio for the combined company of more than 15 top live services with $1.32B in bookings over the past 12 months. On closing, the deal will be immediately accretive to EA’s net bookings and is expected to grow underlying profitability beginning in its first year.

What to watch: Electronic Arts said it struck the deal because it believes mobile is the fastest-growing platform on the planet for videogames. Of note, the Glu acquisition will add several popular franchises and instantly expand EA’s audience. The early reaction from Wall Street is positive, with analysts noting EA poised to double its mobile game revenue, although some execution risk is cited. Within the gaming sector, Zynga (NASDAQ:ZNGA) is up 7% in premarket trading off the M&A buzz. Other public and private peers like Rovio (OTC:ROVVF), GungHo Online Entertainment (OTC:GUNGF), Nexon (OTCPK:NEXOF), Netmarble, and Gamevil could also attract interest if consolidation in the sector picks up.

Red-hot Reddit

Reddit doubled its valuation to $6B with a new $250M funding round led by venture-capital firm Vy Capital. The social media site was valued at $3B after a funding round in February of 2019. Current investors in Reddit also include venture-capital firm Andreessen Horowitz and Tencent Holdings Limited (OTCPK:TCEHY). Reddit Chief Executive Steve Huffman said the company plans to use the new funding to invest in areas like video, advertising and consumer products. An expansion into international markets is also being considered.

Next stage: Reddit was founded in 2005 and has its DNA in free speech message boards. The site relies on its own users to voluntarily police speech, in contrast to the larger social media platforms such as Facebook (NASDAQ:FB) and Twitter (TWTR) that rely mainly on algorithms and paid workers. User growth soared 44% over the last year to a daily average of 52M. That all leads up to the intriguing question of how Redditors would rate a Reddit IPO if the company ever decided to go public?

Tesla buys Bitcoin

Bitcoin (BTC-USD) surged past $42K again after Tesla (TSLA) disclosed it invested $1.5B in the crypto and expects to begin accepting Bitcoin for payment “in the near future.” The bitcoin investment will give Tesla liquidity in the cryptocurrency once it starts accepting payments and follows positive comments by Elon Musk last month on the cryptocurrency. Tesla ended 2020 with just over $19B in cash and cash equivalents on hand.

What they are saying: Wedbush Securities analyst Dan Ives says the Bitcoin play formalizes the strategy of Musk and Tesla to dive into the deep end of the pool of bitcoin and crypto and sees a positive impact for the stock. Meanwhile, RBC Capital wonders if Apple (NASDAQ:AAPL) may be the next big company to buy Bitcoin. Analyst Mitch Steves said the tech giant could unlock a multi-billion dollar opportunity with a few clicks while investing in next-generation chips as well. On CNBC, MicroStrategy (NASDAQ:MSTR) CEO Michael Saylor said he would rather have a volatile appreciating asset than a stable depreciating asset in pitching the case for corporate treasurers to swap out dollars for Bitcoin on company books.

What else is happening…

Take-Two Interactive (NASDAQ:TTWO) slips after earnings.
Pfizer (NYSE:PFE) / BioNTech (NASDAQ:BNTX) double the vaccine supply to EU.
Netflix (NASDAQ:NFLX) dominates again in streaming war.
Microsoft (NASDAQ:MSFT) VC fund’s global head joining SoftBank (OTCPK:SFTBF) Vision Fund.
Super Bowl ratings delay has many expecting heavy viewer decline.

Monday’s Key Earnings
Simon Property (NYSE:SPG) +2.5% PM on earnings growth in 2021.
DHT Holdings (NYSE:DHT) -9.3% PM after Q4 earnings miss.

Today’s Economic Calendar
6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
12:00 PM Fed’s Bullard: “2021 Dow Lecture: U.S.
Economy and Monetary Policy”
1:00 PM Results of $58B, 3-Year Note Auction


Good morning. Happy Monday.

The Asian/Pacific markets closed mostly up. Japan, China, India and Thailand gained more than 1%; South Korea was weak. Europe, Africa and the Middle East are currently doing well. The UK, France, Turkey, Russia, Greece, South Africa, Finland, Switzerland, Hungary, Italy, Sweden and Saudi Arabia are leading. Futures in the States point towards a positive open for the cash market.

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

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

Stories/News from Seeking Alpha…

Renaissance hedge funds hit with $5B in redemptions

Jim Simons’ Renaissance Technologies has seen at least $5B in redemption since the start of December, Bloomberg reports, citing investor letters. Clients withdrew a net $1.85B from the three hedge funds in December, called for $1.95B in January and are set to pull $1.65B this month.

Background: The quant-based public hedge funds posted double-digit losses last year. Renaissance told clients in September it was under-hedged during the March plunge and over-hedged when stocks recovered. Its fund for employees and insiders, though, jumped 76%, Institutional Investor reports.

Fund’s origin: Renaissance, the world’s largest quantitative hedge fund firm, was founded in 1982 by Simons, a former codebreaker for the National Security Agency. He announced last month that he’s stepping down as chairman of the firm, which managed ~$60B at the time. He’ll stay on the board.

On the other side of the spectrum: China’s hedge funds returned 30% on average last year, according to Shenzhen PaiPaiWang Investment & Management Co., Bloomberg reports, dwarfing the average 12% gain for hedge funds globally. China’s hedge landscape is made up of almost 15,000 tiny hedge funds and their outperformance is making it difficult for foreign firms, such as Bridgewater Associates, and Two Sigma, to operate in the country.

South Africa halts rollout of AstraZeneca’s COVID-19 jab

South Africa suspends plans to vaccinate front-line health care workers with the Oxford-AstraZeneca (AZN) vaccine after it failed to prevent mild to moderate illness from the COVID-19 strain that’s dominant in the country. South Africa received its first 1M doses of the AZN’s vaccine last week and was expected to start administering the vaccine in mid-February.

Official’s statement: “The AstraZeneca vaccine appeared effective against the original strain, but not against the variant,” Health Minister Zweli Mkhize said. “We have decided to put a temporary hold on the rollout of the vaccine… more work needs to be done.”

What’s next: Early results from Moderna (MRNA) suggest its vaccine is still effective against the South Africa variant. Developers of the Oxford-AstraZeneca vaccine are expected to have a modified version to cope with the South Africa coronavirus variant by autumn.

Go Deeper: SA contributor Retirement Pot doesn’t see AZN’s vaccine creating much shareholder value.

The SPAC beat goes on

Elliott Management, the hedge fund led by Paul Singer and best known for its activist campaigns, has been meeting with bankers as it considers raising more than $1B for a special-purpose acquisition company, the WSJ reports, citing people familiar with the matter. The process is at an early stage and plans could still change, they said.

He’d join a group of other activists that have already started SPACs, such as Bill Ackman’s Pershing Square Tontine Holdings (PSTH) and Jeff Smith’s Starboard Value Acquisition (SVAC).

Meanwhile SoftBank (OTCPK:SFTBY) files for two more so-called blank-check companies — SVF Investment Corp. 2 and SVF Investment Corp 3, following its initial SPAC, SVF Investment Corp. (SVFAU), whose stock has jumped nearly 12% since its Jan. 8 IPO.

Kia, Hyundai aren’t in talks with Apple on self-driving EV

Hyundai Motor (OTCPK:HYMLF) shares fall 6.2% and Kia Motors (OTCPK:KIMTF) shares fell almost 15% in South Korea after Hyundai made a statement to clarify “rumors” regarding a joint effort with Kia to work with Apple (AAPL) on developing an autonomous electric car. Hyundai said its various discussions about self-driving electric cars are in early stages, with no decisions made at this point.

On Feb. 3, Kia Motors shares jumped 10% in South Korea on local reports that Apple would invest KRW 4T ($3.6B), as part of a collaboration with the carmaker to build electric vehicles.

Expect to hear about EV development from Ford (F) on Tuesday when its executives participate in a fireside chat hosted by JPMorgan Securities.

What else is happening…

U.S. stock futures gain after Yellen promotes Biden’s fiscal plan.
Renesas (OTCPK:RNECF) to buy Dialog Semiconductor (OTCPK:DLGNF) for $5.9B.
China hits Vipshop (NYSE:VIPS) with 3M-yuan fine.
Veolia (OTCPK:VEOEY) goes hostile in bid to buy out Suez (OTCPK:SZEVY).
Jittery Ethereum (ETH-USD) traders lighten up ahead of CME futures launch.

Today’s Economic Calendar
12:00 PM Fed’s Mester Speech
12:30 PM Investor Movement Index


Leave a Reply

Your email address will not be published. Required fields are marked *