Before the Open (Apr 5-9)

Good morning. Happy Friday.

The Asian/Pacific markets closed mixed. Japan, China, Hong Kong, Taiwan, Australia, Singapore and the Philippines did well; New Zealand, Indonesia and Thailand were weak. Europe, Africa and the Middle East are currently posting solid gains. Denmark, Poland, France, Germany, Greece, the UAE, South Africa, Finland, Switzerland, the Netherlands, Portugal and Austria are leading. Only Russia is down much. Futures in the States point towards a moderate gap up open for the cash market.

————— BLOG: My Kiss-n-Cross Setup to Play Continuations —————

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

Stories/News from Seeking Alpha…


The first major unionization drive at an Amazon (NASDAQ:AMZN) warehouse in the U.S. looks set to fail as results continue to be tallied at a fulfillment center located in Bessemer, Alabama. With about half the 3,215 ballots counted so far by the National Labor Relations Board, about 70% of Amazon employees at BHM1 have sided against unionization, which is well ahead of estimates that forecast somewhat of a close race. Officials will resume counting today, when a final outcome could become clear.

Bigger picture: Over the past few weeks, Amazon has pulled out all the stops to try and convince the workers at BHM1 that unionization would not be in their favor. It seems like the efforts paid off, which included aggressive advertising, mandatory anti-union meetings and sending workers multiple texts per day. Not only did the firm attract new workers to vote against the effort, but it also appears to have changed the mindset of workers who were planning to back the union, based on the early signs of support needed to trigger the vote in the first place.

Once the results have been formally certified by the National Labor Relations Board, there will likely be an appeal from The Retail, Wholesale and Department Store Union. The RWDSU is already saying that some of Amazon’s tactics against the union were illegal. For example, a drop box that was placed in the parking lot of the facility could have intimidated workers into thinking that Amazon was monitoring the vote and was a direct effort to influence the ballot. Others have pointed to Amazon’s push to have the county change the timing of a traffic light leaving the warehouse parking lot, which the company says was meant to alleviate congestion, though union organizers say it deprived them of a venue for canvassing workers.

What’s next? Some labor experts think the union has a pretty strong case, with local regulators having the power to overturn the vote entirely and grant the union a victory. If that were to happen, the case could go to Washington, where Amazon could appeal on a national level to the NLRB. Don’t expect an easy outcome. The entire process could take another few months.

Inflation risks recede

Stocks closed higher on Thursday as inflation fears continued to fade, as lower bond yields lifted gains for Big Tech companies. While the 10-year Treasury rate surged to 1.776% at the end of March following a string of strong U.S. economic data (stoking expectations the Fed could be forced to raise interest rates sooner than anticipated), Jay Powell appears to be getting his message across to the population. Yesterday, the Fed Chair repeated his view that any upward pressure on prices is “transitory,” while price increases resulting from supply chain bottlenecks should “eventually resolve themselves.”

Bigger picture: In remarks to the International Monetary Fund, Powell stated a number of factors were putting the nation “on track to allow a full reopening of the economy fairly soon.” He also expressed concern over long-term “labor market scarring” and assured continued support for those out of work due to the pandemic. An unexpected rise in the number of Americans filing new claims for unemployment benefits kept a lid on the Wall Street buying enthusiasm on Thursday, but also led investors to trust Powell’s statements of continuous support and calmed inflation jitters.

Money is also rotating between sectors at high speed, returning to tech yesterday as cash flowed out of energy and financials. “The pandemic accelerated changes in business,” Powell declared at the IMF meeting. “It’s important to remember we’re not going back to the same economy. This will be a different economy. Businesses are adopting more efficient technologies and that may lead to hiring perhaps fewer people.” Overnight, cyclicals were meanwhile inching ahead of their growth rivals, with contracts linked to the Dow Jones up 0.2%, while the Nasdaq dipped 0.2%, and the S&P 500 looked set to notch another record high.

More inflation data: Traders will be watching the latest report from the Labor Department this morning, which will disclose producer prices for March. The headline Producer Price Index is expected to rise 0.5% month-over-month, matching the gain seen in February.

Tax warning

New York passed plans this week to increase taxes on its most affluent residents, though top business leaders say the increases could backfire by driving away top earners from the city. The $212B state budget includes more aid for schools, tenants and small businesses. It also allocates billions to other progressive efforts like renewable energy and nonprofit arts, as well as workers who don’t qualify for federal aid because of their immigration status.

By the numbers: While New York state income tax rates will rise and new brackets have been added, making headlines is the percentage New York City’s ultra-high earners will have to pay. Marginal income tax rates could be nearly 52%, which would mean the city’s wealthiest residents could end up giving more of their paychecks to federal, state and local governments than they keep for themselves. It would also push NYC past California, which currently has the highest marginal personal tax rate in the U.S. – just over 50% on income over $1M.

Executives at major Wall Street firms and other New York employers have warned city officials of the consequences. In a letter delivered to Gov. Andrew Cuomo and leaders of the state Legislature, 250 business executives said the package of tax increases would “jeopardize New York’s recovery from the economic crisis inflicted by COVID-19.” New York is already having a slow recovery, with the state’s unemployment rate at 8.9% in February, the second highest among the 50 states and D.C.

Outlook: Elliott Management, Icahn Enterprises (IEP), Silver Lake, Blackstone (BX) and Moelis (MC) are among the firms that have either moved their HQ or opened new offices in Florida over the past year. Goldman Sachs Asset Management (GS) is meanwhile considering plans to expand in the state – which has no income tax – while JetBlue (JBLU) is looking to relocate its headquarters there from NYC. Many companies have also discovered during the work-from-home lockdowns that they didn’t need to keep employees in Manhattan or that the high cost of an NYC flagship office is no longer worth it.

‘Commercial real estate tsunami’

Shares of Levi’s (NYSE:LEVI) rose 2% on Thursday and are up another 4% premarket, after the jeans maker topped expectations with its Q4 report and issued a confident outlook. The pandemic was major factor, but global digital net revenue increased approximately 41% during the quarter to comprise around 26% of total revenue. Adjusted gross margin also increased 200 basis points to 57.7% of sales, primarily due to a better mix within wholesale, price increases and lower promotions.

The company also announced plans to add to its 40 stores and 200 outlets across the U.S. to boost its direct-to-customer operations. “That represents a huge opportunity especially with the commercial real estate tsunami that is happening right now,” Levi’s CEO Chip Bergh told CNBC. “It gives us an opportunity to secure great locations at great leases and we’re capitalizing on that.”

Statistic: Vacancy rates at regional malls rose to a record 11.4% in the first quarter of 2021, up from 10.5% in the prior quarter, according to Moody’s Analytics.

Go deeper: As part of its new store rollout, Levis is creating what it calls NextGen stores. Bergh says they will be much more digitally enabled and would provide for a seamless shopping experience between the digital world and the physical brick-and-mortar store. The outlets are also designed to be smaller, as little as 2,500 square feet, and are fortified with machine learning to help with inventory.

King Dollar

Going into 2021, almost every sell-side analyst suggested the dollar would weaken this year, but the U.S. currency has surprisingly appreciated instead. The ICE U.S. Dollar Index, a measure of the currency against six major rivals, has so far bounced nearly 3% this year following a decline of 6.7% in 2020. In the first quarter alone, the dollar climbed 7.2% against the Japanese yen, while the euro in March dropped the most in three years against the greenback.

What happened? Expectations of a weakened dollar were based on loose monetary conditions in the U.S., inflation expectations, rising public debt and a robust global economic recovery. However, signs now suggest the U.S. will outperform other major economies as Europe struggles with its COVID-19 vaccine rollout. A robust U.S. economic performance could also mean divergence in monetary policy, with the Fed tightening monetary policy relatively more quickly than the ECB. “That could see the pace of dollar appreciation accelerate this year,” BofA wrote in a recent research note.

While some analysts acknowledge they were quick to make forecasts, others aren’t giving in. “We do not think that the long-term outlook for the dollar has changed,” said Calvin Tse, a currency analyst at Citi, who still feels the currency could fall as much as 20%. However, Goldman Sachs this week canceled its short call on the dollar, saying after a “choppy few months we are closing our recommended dollar short trade.”

Outlook: The next move for the greenback may depend on whether the Fed will let the economy run hot. Last month, policymakers signaled that expectations for interest rates be kept at near zero through 2023, but some money markets are already positioning for a rate rise as soon as next year. Others suggest that even if the Fed would move early, the relationship has changed, as well as the currency’s traditional role with regard to equities. Once upon a time, a weaker dollar was seen as a boon for U.S. equities, but a stronger buck didn’t prevent the continuous stock market highs that were notched in the first quarter.

What else is happening…

GM (NYSE:GM) idles production at plants as chip shortage worsens.

Biden targets ‘ghost’ guns, background checks and gunmaker immunity.

Credit Suisse (NYSE:CS) ignored warnings on Archegos, Greensill – WSJ.

GameStop (NYSE:GME) plans to elect activist investor Cohen as chairman.

Coinbase concerns? Robinhood (RBNHD) scales up crypto capabilities.

Tesla (NASDAQ:TSLA) looking for showroom space in major Indian cities.

Cathie Wood doubles down on DraftKings (NASDAQ:DKNG) and Palantir (NYSE:PLTR).

Apple (NASDAQ:AAPL) reveals market definition for Epic Games antitrust trial.

Canopy Growth (NASDAQ:CGC) drops as investors digest Supreme Cannabis deal.

AstraZeneca (NASDAQ:AZN) woes grow as Australia curbs COVID-19 shots.

Box (NYSE:BOX) plunges after taking $500M investment from KKR.

Deal with Sony (SONY) sees Netflix (NFLX) get Spider-Man streaming rights.

Today’s Economic Calendar
8:30 Producer Price Index
10:00 Fed’s Kaplan Speech
10:00 Wholesale Inventories (Preliminary)
12:00 PM Fed’s Kaplan Speech
1:00 PM Baker-Hughes Rig Count


Good morning. Happy Thursday.

The Asian/Pacific markets leaned to the upside. China, India, New Zealand, Taiwan, Australia and Indonesia are up; Japan and the Philippines are down. Europe, Africa and the Middle East currently lean to the upside, but there are very few big movers. Denmark, the UAE and Russia are up; Poland is down. Futures in the States point towards a positive open for the cash market.

————— BLOG: My Kiss-n-Cross Setup to Play Continuations —————

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

Stories/News from Seeking Alpha…

It’s looking good

Minutes from the last Fed meeting saw FOMC members point to a brighter outlook for the economy, while agreeing to provide continued support via near-zero interest rates and large monthly bond purchases. Several of them even noted that the recent $1.9T pandemic relief package could improve the position of small businesses slammed by the pandemic, boost consumer spending and contain long-term damage to the labor market. That builds on the latest hiring surge in March, as well as an unemployment drop and business reopenings.

Similar viewpoint: The outlook was echoed by Jamie Dimon, who estimated the coming economic boom could last until 2023. In his annual letter to shareholders on Wednesday, the JPMorgan CEO said strong consumer savings, huge deficit spending, more QE, expanded vaccine distribution and a $2.3T infrastructure plan could lead to a “Goldilocks moment” of fast, sustained growth alongside inflation and interest rates that drift slowly upward. The permanent effect of that growth will depend on the “quality, effectiveness, and sustainability of the infrastructure and other government investments,” he added. “Spent wisely, it will create more economic opportunity for everyone.”

Investors responded in kind, as the S&P 500 notched a fresh closing high of 4,079.95 on Wednesday. Stock index futures climbed further overnight, with contracts linked to the S&P 500 up another 0.4%, and the Dow and Nasdaq ahead by 0.2% and 0.8%, respectively. Further helping sentiment was a statement from the U.S. Treasury, which said Biden’s tax proposals would generate about $2.5T over 15 years in an effort to pay for eight years of infrastructure spending.

On tap: Fed Chair Jay Powell speaks at an IMF event later today, where he is likely to share his views on the global recovery and monetary policy outlook. Investors will also be tracking the latest Labor Department update on the number of Americans filing for unemployment benefits for the first time. Economists expect the downward trend to continue given the rehiring across the economy, with first-time claims totaling 680K during the week ended April 3.

Tax compromise

President Biden is willing to negotiate on the proposed corporate tax rate increase that’s intended to help pay for his $2.3T infrastructure plan. “I’m willing to listen to that,” he replied when asked if he’d consider a lower corporate tax rate than the 28% plan he’s proposing (the current rate is 21%). Republicans have balked at the proposed level of spending, the plan’s priorities and the tax increases, while some companies like Raytheon (RTX) are forecasting a big dent to their bottom lines if the package goes through in its current form.

Responding to the concerns, Biden defended the broad scope and size of the infrastructure plan. “The idea of infrastructure has always evolved to meet the aspirations of the American people and their needs,” he declared. “And it is evolving again today.” Besides such traditional infrastructure projects as fixing roads and bridges, the Biden plan includes broadband networks, childcare initiatives and raising wages for health care workers.

How to pay for it? Biden said there are “many other ways we can do it… I’m willing to negotiate that.” Besides a corporate tax hike, the plan would gain funding from other measures, such as boosting the global minimum tax for multinational corporations and closing so-called offshoring loopholes. “Building the infrastructure of tomorrow requires major investments today,” Biden continued. “The divisions of the moment shouldn’t stop us from doing the right thing for the future.”

Yellen weighs in… In an op-ed piece for the Wall Street Journal, the Treasury Secretary said the Tax Cut and Jobs Act of 2017 has led to the lowest corporate tax collections level since WWII, at 1% of GDP, and the TCJA didn’t even encourage companies to relocate their operations to the U.S. Other countries responded by lowering their taxes as well, resulting in a “race to the bottom,” and the TCJA made the first 10% of returns earned by foreign assets tax-exempt. Moreover, the legislation allowed corporations to bring their foreign profits back to the U.S. and pay the 21% rate or keep them anywhere else in the world, “where the U.S. will charge you around half that.”

Twitter went clubbing

Shares of Twitter (TWTR) closed up another 3% on Wednesday and are up another 1.7% in premarket trade, amid talk about how to monetize its live-audio offering Spaces. That wasn’t all. Bloomberg headlined a report that the company considered a $4B takeover of the audio-based social network Clubhouse. While those talks are no longer ongoing, and it’s unclear why they stalled, it signals that Twitter is bullish on the potential for audio as a new way for users to interact on its app.

What’s Clubhouse? The invitation-only platform is barely a year old but has drawn appearances from some of the biggest names in business and Hollywood. Listeners can tune in to hear interviews, panel discussions or ask to participate in live chats. Clubhouse’s early traction has been impressive, but there are a lot of questions over its longevity, and it’s being cloned by many other platforms.

In fact, Twitter’s own product called Spaces (very similar to Clubhouse) has gradually been rolled out over the past few months. It’s already launched on iOS and Android, and the company plans to launch a web version and open hosting abilities up to all users this month. So why would Twitter enter M&A talks? It may be looking to gain a dedicated user base with a hot name at the same time as eliminating the competition.

Funny happenings: Unrelated social media influencer firm Clubhouse Media (OTCPK:CMGR), which trades on OTC markets, climbed 15% yesterday in response to the report. Similar occurrences of mistaken identity happened earlier this year, when traders responded to an Elon Musk tweet by pushing up the price of Signal Advance (OTCPK:SIGL). In 2020, the rising popularity of Zoom Video (ZM) also triggered a sharp rise in the stock price of Zoom Technologies, which then traded under “ZOOM.” The SEC later suspended trading of the wireless product distributor, partly because of the widespread confusion, and it now trades under OTC ticker “ZTNO.”

Hypersonic setback

The U.S. hypersonic missile program suffered a setback this week as a crucial test of the Air Force’s AGM-183A Air-launched Rapid Response Weapon (ARRW) failed to launch from a B-52 bomber. While the new Lockheed Martin (NYSE:LMT)-built booster is expected to be ready for deployment in the next few years, this test was specifically aimed at demonstrating the ability of the ARRW to achieve hypersonic speed. To date, the Air Force has conducted seven ARRW “captive-carry” flights, in which the B-52H intentionally held onto the missile from takeoff to touchdown, though the most recent trial was supposed to be the first powered test.

What are hypersonic weapons? Missiles in development, like boost-glide missiles and air-breathing missiles, are being designed to evade missile defense systems while flying at Mach 5. The objective here is to travel at such a high velocity that makes them difficult to intercept or defend against. The U.S. is focusing on conventional hypersonic weapons that are based on ships, land and air platforms, with the eventual goal of getting missiles that can travel at 20x the speed of sound. So far, there have been some components tested at speeds near that.

China and Russia first began testing hypersonic weapons in 2014 and 2016, respectively, prompting the U.S. to ramp up its testing programs. China’s DF-ZF has already been tested at least nine times since then, while Russia’s hypersonic glide vehicle, known as Avangard, is equipped with nuclear warheads, according to the Congressional Research Service. Moscow even announced in December 2019 that it had activated Avangard aboard two SS-19s, the intercontinental ballistic missiles from which its hypersonic vehicle is launched.

Go deeper: Last year, former acting Navy Secretary Thomas Modly said hypersonic weapons “have already changed the nature of the battlespace, much as nuclear technology did in the last century.” The Pentagon’s FY2021 budget reflected as such, with requests for hypersonic-related research pegged at $3.2B, up from $2.6B a year earlier. The U.S. hopes to have hypersonic missiles ready for deployment in the next several years, with hypersonic defense capability a few years later.

NFT risk

The debate over whether NFTs will have a lasting impact on the art market is still ongoing, but headlines are still being made by the man who stoked NFT mania. Anyone trying to profit from NFTs is “taking a huge risk,” Vignesh Sundaresan announced in an interview, adding that “it’s even crazier than investing in crypto.” Sundaresan, also known by the online moniker MetaKovan, shelled out $69M last month for JPEG ownership and a hyperlink of Beeple’s Everydays: The First 5,000 Days.

Waning sentiment can be seen in recent auctions. Average prices for NFTs tracked by slumped almost 70% from a peak in February through early April. B.20, a token created by MetaKovan to allow “shared ownership of an open art project,” has also fallen to around $5 from $23 since he won the Christie’s auction for Everydays on March 11.

Why did he do it? “It’s not primarily an investment,” Sundaresan declared, saying his motivation was to support the NFT artist and showcase the technology. “I had this opportunity to be part of this very important shift in how art has been perceived for centuries,” he added in another recent interview. To note, Sundaresan paid 42,000 Ether (ETH-USD) for the piece of art, which was probably worth a whole lot less when he first started investing in crypto in 2013.

Long-term outlook: Sundaresan described the technology as an continuing innovation that will permit a “new patronage movement” for artists and other content creators, though the hype around the highest-priced NFTs will likely fade. “I don’t think NFTs will hold the same kind of hype forever around high-value items,” he added. “The market will get divided. There will be very few high-value items and an infinite number of very low-valued items.”

What else is happening…

Biden tax proposal targets $35B worth of fossil fuel subsidies.

Deutsche Bank calls Dell (NYSE:DELL) a top recovery idea.

Uber (NYSE:UBER) announces $250M stimulus to bring back drivers.

AstraZeneca (NASDAQ:AZN) vaccine labelling to indicate blood clot side effect.

Bitcoin (BTC-USD) a Chinese weapon against U.S., suggests Peter Thiel.

World’s top copper producer raises output despite COVID surge in Chile.

Biden set to unveil executive actions on firearms.

GM (NYSE:GM) testing technology aimed at cutting EV battery costs.

Exxon (NYSE:XOM) explores sale of elastic polymer business.

Home improvement coming off peak, but lots of upside left – Evercore.

Today’s Economic Calendar
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
11:00 Fed’s Bullard Speech
12:00 PM Jerome Powell Speech
2:00 PM Fed’s Kashkari Speech
4:30 PM Fed Balance Sheet


Good morning. Happy Wednesday.

The Asian/Pacific markets leaned up. Japan, India, New Zealand, Australia, Malaysia, Indonesia and the Philippines did well while China, Hong Kong and Thailand were weak. Europe, Africa and the Middle East currently lean down. The UK, Greece and Hungary are up, but Denmark, Poland, Turkey, the UAE, South Africa and Italy are down. Futures in the States point towards a down open open for the cash market.

————— BLOG: Using Stochastic to Time Entries —————

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

Stories/News from Seeking Alpha…

Corporate activism

Back in March, we reported on the Nasdaq’s (NASDAQ:NDAQ) board diversity plan, which created tensions between those advocating for greater corporate diversity and those seeing it as an industry quota system. The same argument played out this week in other areas of Corporate America, which is increasingly becoming a dominant political force. Once upon a time, the business world sought to maximize profits of shareholders in the political sphere via lobbying or marketing efforts, but their newfound power is developing into a kind of governance system, while many investors are buying into the vision.

One doesn’t have to look far to the permanent suspension of President Trump on Twitter (NYSE:TWTR), whose stock is up 30% since the ban in January, as well as Parler’s removal from the Apple (AAPL) and Google (GOOG) app stores and web hosting by Amazon (AMZN). The corporate world has also brought in activists to their success, like Colin Kaepernick, who has been a prominent endorser for Nike (NYSE:NKE) – the stock of the sneaker giant is up 175% since the partnership first began in late 2018. Kaepernick has also gone on to work with global brands like Netflix (NASDAQ:NFLX), Beats by Dre, Medium, Electronic Arts (NASDAQ:EA), Audible and Ben & Jerry’s (NYSE:UL).

Down to Georgia… The state made changes to its voting laws this week, including new ID requirements for absentee voters, shortened absentee voting, guaranteed (but limited) drop boxes, expanded early voting and bans on handouts for people waiting in line to vote. GOP lawmakers said the bill was necessary to restore election confidence, though Democrats feel the measure will restrict voting rights, and some have even called it “Jim Crow 2.0.” Soon after the decision, the MLB announced it would no longer hold the 2021 All-Star Game in Atlanta, and other corporations were quick to jump on board. Dozens of executives have come out to blast the new law, including leaders at Apple, American Express (NYSE:AXP), Coca-Cola (NYSE:KO), Delta (NYSE:DAL), Merck (NYSE:MRK) and Microsoft (NASDAQ:MSFT).

Thought bubble: While companies have long sought to influence policies that directly impact their business, recent trends suggest CEOs are now injecting themselves into political debates or activism that could indirectly affect their bottom line. In an age of cancel culture, and where ideas are carried on social media within minutes, they may have to, though others warn of potential risks and consequences of picking sides. On that note, JPMorgan (NYSE:JPM) CEO Jamie Dimon will release his annual shareholder letter today, which is expected to outline ideas for tax and social policies, a day after Amazon (NASDAQ:AMZN) CEO Jeff Bezos came out in support of President Biden’s corporate tax hike and infrastructure plan.

Hovering near records

U.S. stock index futures wavered between slight gains and losses overnight, with the Dow Jones and S&P 500 drifting near record highs, and the Nasdaq not far behind. Wall Street took a breather on Tuesday, and could be in for some more restful days, according to DataTrek Research co-founder Nick Colas.

Quote: “We’ve had such a strong start to the second quarter that it’s totally reasonable to think that we’re going to basically hang out here as markets digest what has happened. Earnings season is coming, which has to be strong and forecasts need to get bumped up. We’re also going to see GDP number for Q1 later this month. All those things are going to factor into whether or not this latest rally is really sustainable.”

Bullish economic news wasn’t enough to energize the market on Tuesday despite some great figures. Job openings rose by more than expected in February, hitting a two-year high at 7.4M. The IMF also raised its global growth forecast to 6% this year from 5.5%, a rate not seen since the 1970s.

On tap: Minutes will be released from the Fed’s last meeting in March, when the central bank upwardly revised its economic projections and telegraphed that interest rates would likely remain at near-zero levels through 2023. The minutes could provide some clarity as to how committed the FOMC is to keeping rates low or how members might change their policy rate views if their upbeat forecasts for growth, jobs and inflation come to fruition. While the meeting will be of particular note to investors, remarks from Jay Powell tomorrow may offer a more timely view of the central bank’s policy thinking.

Biggest deal ever

Southeast Asia’s most valuable startup is ready to go public, making its debut in the SPACsphere. Grab (GRAB) was founded as a ride-hailing company in 2012, before expanding into payments in 2016 and food delivery in 2018. It also offers loans, insurance and has been granted a digital banking license in Singapore.

Reports previously suggested the company was in talks to list in New York via one of Altimeter Capital’s special purpose acquisition companies, and the FT says that will happen as soon as this week. The investment firm has raised a total of $850M for Altimeter Growth (NASDAQ:AGC) and Altimeter Growth 2 (NYSE:AGCB), which are up 20% and 12% premarket, respectively. The merger would be the largest between a private business and a blank check company, in a deal that will value SoftBank-backed (OTCPK:SFTBF) Grab at about $35B.

By the numbers: According to a business update in January, Grab’s revenue grew 70% in 2020 compared with 2019, though the company is still not profitable. However, Grab did add that its ride-hailing business was breaking even in all of its operating markets. “We’ve continued to be disciplined with spending and prudent in stewarding our shareholder capital, with monthly EBITDA spend being reduced by approximately 80% over the last 12 months,” said Grab President Ming Maa.

Go deeper: A public debut from Grab will offer investors access to a regional consumer market of more than 655M people across countries including Indonesia, Thailand and Vietnam. It’s especially noteworthy because the “deal is coming from Asia and furthermore, from Southeast Asia, a region totally underrepresented on U.S. stock markets,” a banker told the FT. It’ll also be a key test for other Southeast Asian unicorns that are preparing to go public this year.

Vaccine eligibility

President Biden announced Tuesday that all U.S. adults will qualify for coronavirus vaccines by April 19, moving up his eligibility timeline for the general population by about two weeks. In addition, there will be vaccination sites within five miles of where people live, while the number of pharmacies contributing to the federal pharmacy vaccination program would increase from the current 17,000 locations to 40,000. So far, COVID-19 has killed more than 555,000 people in the U.S. – the world’s highest recorded coronavirus death toll.

“There is a lot of good news. But there’s also some bad news,” he said during a visit to vaccination site at Virginia Theological Seminary in Alexandria, Virginia. “The virus is spreading because we have too many people who’ve seen the end in sight, think we’re at the finish line already. Let me be deadly earnest with you…We’re still in a life and death race against this virus.”

Bigger picture: The U.S. has been outpacing most of the world in its vaccine rollout, especially given the size of its population, placing itself in the best position for a reopening of the economy. The pace of vaccinations has even increased to an average of 3.1M doses a day administered over the past week, from about 1M doses a day when Biden took office. At that rate, it will take an additional three months to cover 75% of the population, also known as the herd immunity number.

Outlook: Pricing in the vaccine rollout, along with market stimulus, investors are adjusting their portfolios for Q2 and beyond. The consistent theme echoed in the investment community has been the transition to cyclical names, while value has been consistently outperforming growth names YTD. With rates set to rise and a back-to-normal economy looking more optimistic, UBS, Russell Investments and BlackRock are among institutions that favor value looking into the future.

New pandemic shortage item

Forget about toilet paper, hand sanitizer and semiconductors, restaurants are having trouble securing enough ketchup. With the COVID-19 pandemic turning many sit-down restaurants into takeout businesses, packet prices have risen 13% since January 2020, according to restaurant platform Plate IQ. Some stores can’t even get their hands on enough of the condiment, WSJ reports, with managers using generic versions, dishing out bulk ketchup into single-serve cups or seeking secondary suppliers due to the demand.

Backdrop: Ketchup is the most used table sauce in the U.S., logging over $1B in U.S. retail sales during 2020, about 15% higher than 2019. Around 300K tons of the tomato condiment were sold to restaurants last year, and recent CDC directives could be exacerbating the situation. “As restaurants and bars resume and continue operations, avoid using or sharing items that are reusable, such as menus, condiments, and any other food containers,” reads the guidelines. “Instead, use disposable or digital menus (menus viewed on cellphones), single serving condiments, and no-touch trash cans and doors.”

How is the ketchup king handling the situation? Kraft Heinz (NASDAQ:KHC) holds nearly 70% of the U.S. retail market for the condiment, but it was caught off guard by the pandemic. “Restaurants need patience” while the company ramps up supply, said Steve Cornell, President of Enhancers, Specialty and Away from Home Business Unit. “We’re busy doing everything we can.”

Go deeper: To deal with the shortage, Heinz is planning new manufacturing lines, including two this month and more after that. The goal is increasing production by 25% to bring the total of ketchup packets produced per year to 12B. The firm is already running extra shifts at plants, and cut back on some sauce varieties to focus on single-serve packets. Heinz also came up with a no-touch ketchup dispenser to help meet demand for alternatives to shared bottles.

What else is happening…

Cold War flashbacks… U.S. weighs boycott of Beijing Olympics.

Morgan Stanley (NYSE:MS) dumped $5B in Archegos stocks before fire sales.

GM (NYSE:GM) confirms all-electric Chevy Silverado is in the works.

Oxford pauses AstraZeneca (NASDAQ:AZN) vaccine study on children.

Coinbase (COIN) provides some financials ahead of direct listing.

How’s the cruise industry? Carnival (NYSE:CCL) to provide business update.

PG&E (NYSE:PCG) hit with criminal charges over 2019 Kincade fire.

Samsung (OTC:SSNLF) forecasts operating profit rose 44% in Q1.

Toshiba (OTCPK:TOSBF) gets buyout deal that could be worth $18B.

Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 International Trade
9:00 Fed’s Evans Speech
10:30 EIA Petroleum Inventories
11:00 Fed’s Kaplan Speech
12:00 PM Fed’s Barkin: Economic Outlook and Monetary Policy
1:00 PM Fed’s Daly Speech
2:00 PM FOMC Minutes
3:00 PM Consumer Credit


Good morning. Happy Tuesday.

The Asian/Pacific markets were mixed. Hong Kong, Taiwan, Australia and the Philippines did well; Japan, New Zealand and Thailand were weak. Europe, Africa and the Middle East are currently posting solid gains. The UK, Denmark, Poland, Germany, South Africa, Norway, Hungary and Portugal are up more than 1%. Turkey and Russia are weak. Futures in the States point towards a flat open for the cash market.

————— BLOG: Using Stochastic to Time Entries —————

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

Stories/News from Seeking Alpha…

Global minimum tax

As the spring meetings of the IMF and World Bank begin in a virtual format, U.S. Treasury Secretary Janet Yellen had a message for governments across the globe. “It is important to work with other countries to end the pressures of tax competition and corporate tax base erosion… to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations,” she said in her first major speech on international economic policy. Yellen is specifically advocating for the adoption of a global minimum levy for corporations in order to avoid a “race to the bottom” on taxation.

Backdrop: President Biden has proposed hiking the U.S. corporate tax rate to 28% from 21%, partially undoing the Trump administration’s cut from 35% in its 2017 tax legislation. Biden also wants to set a minimum U.S. tax on overseas corporate income to make it harder for companies to shift earnings offshore. A minimum global corporate income tax could partially offset any consequences that may arise from the U.S. corporate tax hike and would help pay for the White House’s ambitious $2.3T infrastructure plan.

Questions to ask: Will nations (or Congress) agree to the tax? What will the level be? And will it include enforcement mechanisms or be effective enough to eliminate tax havens or low tax jurisdictions?

While many countries have endorsed a minimum tax (there’s been talk at the OECD for years), others may not embrace one unless they can claim a bigger stake in the profits of U.S. tech companies. The debate also touches on the ongoing friction in international taxation: whether to tax companies based on the location of their income or the location of their headquarters. The U.S. didn’t have a pure system before or after the 2017 tax act, which leaned toward taxes based on where revenues are generated, though the Biden administration appears to be focusing more on the latter.

Pausing for breath

More bullish economic data saw investors drive stocks higher in a broad advance on Monday. U.S. services industry activity jumped to a record high in an ISM survey following Friday’s bumper jobs report that showed U.S. nonfarm payrolls surging in March. Traders scooped up underperforming sectors like tech and communication services, and the only sector to finish in the red was energy, which was hit by a drop in oil prices. Cruise operators meanwhile had a stellar session, with Norwegian (NCLH) leading the S&P 500 to finish the day up 7% after asking the CDC to resume trips from American ports starting July 4.

Bigger picture: While the Dow and S&P continue to notch new records, the Nasdaq is still about 3% below its February high, as the recent spike in bond yields made growth stocks less attractive. However, yields haven’t budged much in recent days and lockdowns in countries like France have recently helped give the sector a boost. Following the record session, stock futures ticked lower in overnight trading, while the Labor Department is expected to report job openings data for February. The IMF today is also expected to raise forecasts for 2021 global growth in response to U.S. fiscal stimulus and vaccinations.

“It looks like the U.S. [economy] has just hit the accelerator,” said Brian O’Reilly, head of market strategy for Mediolanum International Funds. “We’ve certainly seen a moderation in the one-way bet [on cyclical sectors] that was being placed until maybe the middle of March. The main risk is still a reversal in Fed language.”

In crypto markets: Ether (ETH-USD) has been rallying strongly, up another 3% overnight to $2,112. The coin powers the Ethereum blockchain, a platform that is touted for its so-called decentralized finance, or DeFi, applications. The growing excitement saw the value of the entire crypto market top $2T for the first time on Monday, just two months after it surpassed $1T, as retail and institutional investors continue to pile into the space.

Archegos disaster

Fallout from the Archegos affair keeps making headlines as Credit Suisse (NYSE:CS) logged a $4.7B hit following the meltdown of the investment firm. Credit Suisse’s investment banking and risk chiefs will also get the boot, along with a number of business heads. The Swiss bank further scrapped proposals for executive bonuses for the year and slashed its dividend to a proposed 0.10 francs per share (from a payout of 0.2926 francs).

Recap: In late March, Archegos defaulted on margin calls from several global investment banks, including Credit Suisse, Nomura (NMR), Morgan Stanley (MS) and Goldman Sachs (GS). The fund had large, concentrated positions in ViacomCBS (VIAC), Baidu (BIDU) and other companies, but its use of total return swaps helped hide its high exposure from the banks. The derivative contracts exposed the firm to severe losses when the trades went sour, with fund manager Bill Hwang reportedly losing $8B in just ten days.

Credit Suisse was forced to dump a significant amount of stock to sever its ties with Hwang’s firm, and now expects a first quarter pretax loss of around 900M Swiss francs ($960M). Meanwhile, another round of block trades on Monday saw Credit Suisse dump Archegos-linked stocks like ViacomCBS and Vipshop (VIPS), marking the second crisis to hit the bank in recent weeks. Earlier in March, Credit Suisse froze $10B in investment funds connected to now-insolvent Greensill Capital after marketing funds that financed the company’s operations.

Outlook: The biggest source of banks’ trading revenue was once client commissions, but those have narrowed over the last decade, leading their prime brokerage businesses to grow. That’s where lenders provide financing for clients like hedge funds, as well as pooling trading and risk exposures to help drive profitability across their trading desks. However, banks have been struggling to handle a flood of deposits, while trying to not increase their capital requirements, which can partly explain the appeal of total return swaps involving Archegos. Balance sheet exposures must be carefully managed by institutions, and the ability to finance clients via prime brokerage does have its limits.

Vaccine passports

“Anything is on the table. Anything is possible, of course,” Dr. Anthony Fauci had said in January regarding a U.S. vaccine passport, though he dispelled the notion in a Politico Dispatch podcast on Monday. “I doubt that the federal government will be the main mover of a vaccine passport concept,” he declared. “They may be involved in making sure things are done fairly and equitably, but I doubt if the federal government is going to be the leading element of that.”

What may happen instead? Businesses, schools or hospitals could require vaccine documentation to enter buildings, or orders may be implemented at the state or local level. “I’m not saying that they should or that they would, but I’m saying you could foresee how an independent entity might say, ‘well, we can’t be dealing with you unless we know you’re vaccinated,’ but it’s not going to be mandated from the federal government.”

Vaccine passports could speed up travel or economic reopenings, but the idea of requiring the documents has become a point of political contention, while legal issues are still being debated. Florida Gov. Ron DeSantis issued an executive order on Friday prohibiting businesses from requiring customers to show proof they have received a coronavirus vaccine and prevented the state government from issuing such passports. “It is necessary to protect the fundamental rights and privacies of Floridians and the free flow of commerce in the state,” he announced, saying requiring immunization credentials “would create two classes of citizens.”

Looking abroad: Israel launched its “green passport” program back in January to residents who have received a coronavirus vaccine or those who have recovered from the illness. The passport lifts some restrictions, including mandatory quarantine following exposure to an infected person or traveling abroad, and can be used for attending cultural and sporting events or eating inside restaurants. The EU also unveiled a proposal for vaccine passports in March, which would allow citizens to cross borders without quarantine requirements.

Labor battle

Work practices and conditions are in the spotlight at Amazon (AMZN), which is now the second-largest private employer in the country. Results from a unionization initiative at its facility in Bessemer, Alabama, called BHM1, are still pending, but a verdict is expected within days. Nearly 6,000 employees participated in the vote, making it the first such significant effort by Amazon workers in the U.S. 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, but even if it fails, it could inspire other Amazon warehouses to organize.

Bigger picture: Amazon has been fighting hard against the endeavor, and has successfully fended off unionization efforts elsewhere in the U.S., but other labor unrest is brewing. The retail behemoth apologized to Rep. Mark Pocan (D-Wis) on Monday after falsely denying that some of its drivers are forced at times to urinate in plastic bottles. “If that were true, nobody would work for us,” the official Amazon Twitter account wrote, before the company backtracked in a blog post.

“We know that drivers can and do have trouble finding restrooms because of traffic or sometimes rural routes, and this has been especially the case during Covid when many public restrooms have been closed. Regardless of the fact that this is an industry-wide issue, we would like to solve it. We don’t yet know how, but will look for solutions.”

Go deeper: The National Labor Relations Board recently found that Amazon illegally fired two UX designers last year for publicly pushing for the company to address warehouse worker concerns and its impact on climate change. The agency will accuse Amazon of unfair labor practices if it doesn’t settle the case, according to correspondence viewed by the NYT. Last month, NBC News also reported that enough Amazon workers have filed charges against the company over the last year that the NLRB is considering launching a national investigation.

What else is happening…

How much time does Tim Cook have left at Apple (NASDAQ:AAPL)?

Supreme court backs Google (GOOG) in Oracle (NYSE:ORCL) copyright case.

Taking advantage… GameStop (NYSE:GME) finally announces stock offering.

Goldman Sachs (GS) cancels its short call on the U.S. dollar.

Tesla (NASDAQ:TSLA) appeals federal order on Musk anti-union tweet.

Grayscale is 100% committed to converting GBTC into an ETF.

Nikola (NASDAQ:NKLA) falls after ‘strange’ barter transaction with ex-CEO.

Southwest Airlines (NYSE:LUV) is starting to bring back pilots.

Roblox (NYSE:RBLX) gets lift as more analysts start Buy coverage.

Facebook (NASDAQ:FB) introduces dynamic ads for streaming services.

EU Commissioner says bloc may reach herd immunity by July 14.

Today’s Economic Calendar
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey


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

The Asian/Pacific markets closed mixed. Japan, China, Hong Kong, Taiwan, Australia, Singapore and the Philippines did well; New Zealand, Indonesia and Thailand were weak. Europe, Africa and the Middle East are currently posting solid gains. Denmark, Poland, France, Germany, Greece, the UAE, South Africa, Finland, Switzerland, the Netherlands, Portugal and Austria are leading. Only Russia is down much. Futures in the States point towards a moderate gap up open for the cash market.

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

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

Stories/News from Seeking Alpha…

Monster debut

Good news for the movie industry has finally arrived as tentpole Godzilla vs. Kong gave a shot in the arm for theaters and Hollywood. The film from Warner Bros. (NYSE:T) and Legendary Entertainment generated $32.2M over Easter Weekend and garnered $48.5M in the U.S. and Canada during its first five days of release. A monstrous debut was also seen abroad, where the movie added an additional $71.6M to its box office haul. Since opening last week internationally, the film has tallied $285.4M.

Quote: “For anyone who may have doubted the pent-up demand for moviegoing, this performance is yet another sign of just how resilient the theatrical industry can be,” said Shawn Robbins, chief analyst at

Not only did GvK post the best pandemic opening numbers since March 2020, but the title opened in more than 3,000 theaters in North America over the weekend, the most of any movie during the pandemic. More than 90% of U.S. cinemas have so far reopened, according to Warner Bros, though they are operating at reduced capacity to meet social distancing guidelines.

Outlook: The turnout among ticket buyers was especially notable given that the film is available for free for subscribers of HBO Max. Warner Bros last year decided to stream all of its 2021 movies on the same day they debut in cinemas, infuriating some filmmakers and actors, but the latest results may suggest the two can exist simultaneously. “To me, streaming and movie going were never really true enemies because they’re two very different experiences,” Robbins continued. “For the past year, people have been stuck at home and movie going has left our daily lives, and not by choice. Now that choice is back and we’re seeing that people still want to go to the movies.”

Bumper jobs report

Investors are digesting the March nonfarm payrolls report a bit late as markets were closed at the end of the week for Good Friday. The strong bounce in U.S. job growth, compounded with an accelerating vaccine rollout, is giving traders renewed enthusiasm after the S&P 500 topped the 4,000 milestone for the first time on Thursday. Overnight, the index rose another 0.5%, along with the Nasdaq and Dow Jones Industrial Average.

By the numbers: The NFP report smashed expectations, with the U.S. adding 916,000 jobs in March, the highest since August 2020. Growth was led by gains in leisure and hospitality, public and private education, and construction, while the unemployment rate fell to 6% from 6.2%. Helping boost sentiment is expected stimulus from a coming infrastructure proposal, as well as the current pandemic picture. The U.S. reported another daily record of new COVID vaccinations on Saturday, pushing the weekly average of new shots per day above 3M.

Other data this morning is expected to show a rebound in the U.S. services sector. The ISM Services Index, released at 10 a.m. ET, will likely display activity accelerating in the U.S. industries hardest hit by shutdowns and stay-at-home orders. A services recovery has so far lagged behind manufacturing, and investors will be watching the figures to gauge the start of a broader economic revival.

Other notable movers: WTI crude futures (CL1:COM) slipped 2% overnight, paring the big gains made in the previous session after OPEC+ agreed to gradually raise production from May through July. Tesla (TSLA) shares meanwhile popped premarket, climbing 8% to $713/share, after Q1 deliveries topped estimates and Wedbush weighed in with an upgrade.

Infrastructure push

President Biden’s second major legislative initiative so far looks unlikely to draw more bipartisan support than his first $1.9T COVID-19 relief package. Republicans are taking aim at the $2T infrastructure plan released last week, with Senator Roy Blunt urging the administration to significantly scale back the project if Biden wants GOP support. “If we’d go back and look at roads and bridges and ports and airports, and maybe even underground water systems and broadband, you’d still be talking about less than 30% of this entire package,” he said on Fox News Sunday. Senate Republican leader Mitch McConnell has also vowed to fight the scheme at “every step of the way,” saying the proposal would increase debt and raise taxes.

It may not matter. Over the weekend, Energy Secretary Jennifer Granholm said Biden is willing to push through the American Jobs Plan. He would prefer to have GOP backing, she told CNN’s State of the Union, but if that does not work, he would likely support using reconciliation to allow Democrats to pass it in the Senate. The White House is also planning a second proposal in the coming weeks to address so-called social infrastructure, including childcare, healthcare and college tuition, which would be paid for by tax increases on wealthy households.

Bigger picture: The infrastructure initiative, as well as the measures it contains to curb climate change (net-zero emissions by 2050), may be the next tailwind for ESG funds. The investments already captured $51.1M of net new money from investors in 2020, marking their fifth consecutive annual record, according to Morningstar. 3 out of 4 sustainable funds even ranked in the top half of their investment category over the past three years.

Go deeper: Barron’s this weekend discussed some stocks that may enjoy further gains if the market sees an infrastructure plan moving towards passage. Among them are engineering and construction companies like MasTec (NYSE:MTZ) and Vulcan Materials (NYSE:VMC), as well as clean-tech winners including TPI Composites (NASDAQ:TPIC), Sunrun (NASDAQ:RUN) and SolarEdge Technologies (NASDAQ:SEDG). Discover another 10 stocks that could benefit from the bill.

Housing boom

Stocks aren’t the only market to have rallied for much of the last year. In fact, the real estate sector has seen some of the fastest house price growth in more than a decade and there aren’t many communities where prices have fallen since the pandemic. Despite rising costs and mortgage rates, homes are still getting snatched off the market at a record pace, per a new Redfin report. About 59% of homes that went under contract had an accepted offer within two weeks of hitting the market, while more than 40% of homes sold above the original asking price.

U.S. home prices soared 11.2% in January, their biggest annual increase in 15 years, according to the S&P CoreLogic Case-Shiller national index. The data also “remained consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” declared Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. Roughly one-quarter of American workers are now doing their jobs from home, along with children who are going to school online.

Flashback to 2007? Not really. Many argue that this time around buyers have higher credit ratings and are putting down more cash up-front. Economists also forecast sales to rise again this year, while there are fewer systemic risks and the market is critically undersupplied. New construction hasn’t kept up with household demand, and buyers are competing fiercely for a limited number of homes. While financial firms are still packaging mortgages as securities, the vast majority of those today have government backing.

Outlook: “Looking ahead, Biden’s infrastructure plan aims to incentivize zoning for multi-family homes, which could increase the supply of affordable homes and provide even more people a path to homeownership,” said Redfin chief economist Daryl Fairweather. “But there is no guarantee the incentives would be enough for local governments to change their zoning practices.”

Smartphone exit

Once one of the top smartphone makers in the U.S., LG Electronics is exiting the mobile business after talks with potential buyers came to an end. The South Korean company was early to market with a number of cell phone innovations (ultra-wide angle cameras and powerful stereo speakers), and at its peak in 2013, it was even the world’s largest smartphone manufacturer behind Samsung (OTC:SSNLF) and Apple (NASDAQ:AAPL). Those two will likely gobble up its market share, which stands at 10% in North America.

What happened? Its flagship models were hurt by both software and hardware casualties, while slower software updates saw the brand steadily slip out of favor. Analysts have also blasted the company for lack of expertise in marketing compared to Chinese rivals. While LG was the first to adopt Google’s (GOOG, GOOGL) Android OS, its smartphone division has recorded nearly six years of losses totaling about $4.5B and the time had come for an exit.

It’s not the first time this has happened. Other well-known mobile brands like BlackBerry (BB), Nokia (NOK) and HTC (OTC:HTCKF) have also tumbled from lofty heights and have worked to transform their companies away from smartphones.

The future: “LG’s strategic decision to exit the incredibly competitive mobile-phone sector will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as platforms and services,” the company said in a statement.

What else is happening…

Data of 533M Facebook (NASDAQ:FB) users reportedly leaked online.

Coinbase (COIN) set to go public in direct listing on April 14.

Office REIT stocks lag market as office occupancy stays low.

Hummer EV SUV from General Motors (NYSE:GM) tops $110,000.

Disney Plus (NYSE:DIS) is rivaling Netflix (NASDAQ:NFLX) in subscriber loyalty.

T-Mobile’s (NASDAQ:TMUS) TV bailout is not so surprising.

GameStop (NYSE:GME) squeeze no longer helping most-shorted U.S. stocks.

Hertz (OTCPK:HTZGQ) chooses Centerbridge-backed plan to exit bankruptcy.

Seadrill (OTCQX:SDRLF) reportedly asks creditors to write off $4.8B of debt.

FDA clears Supernus’ (NASDAQ:SUPN) Qelbree for treatment of ADHD.

Today’s Economic Calendar
9:45 PMI Composite Final
10:00 ISM Service Index
10:00 Factory Orders
12:30 PM Investor Movement Index


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