Good morning. Happy Friday.
The Asian/Pacific markets were split, with moderate movers in both directions. Hong Kong, Malaysia and Singapore did well; Japan, South Korea, Taiwan and the Philippines were weak. Europe, Africa and the Middle East are doing great. The UK, Poland, France, Turkey, Germany, Greece, South Africa, Finland, Norway, Hungary, Spain, the Netherlands, Italy, Austria and Sweden are all posting solid gains. Only Denmark, Israel and Saudi Arabia are down much. Futures in the States point towards a moderate gap up open for the cash market.
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COURSE: Learn How to Trade
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The dollar is down. Oil and copper are up. Gold and silver are up slightly. Bonds are down. Bitcoin is up.
Stories/News from Seeking Alpha…
It appears as if Seeking Alpha is no longer giving their morning comments away for free…which means I can’t copy & paste them here. I’ll play around with it this weekend and see if this is the case. If so I’ll find a substitute.
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Good morning. Happy Thursday.
The Asian/Pacific markets posted big losses. Japan, China, Hong Kong, South Korea, India, Malaysia, Singapore and Thailand each dropped at least 1%. Europe, Africa and the Middle East are currently down big. The UK, Poland, France, Germany, Russia, Greece, South Africa, Finland, Switzerland, Norway, Spain, the Netherlands, Italy, Israel, Austria, Sweden, Saudi Arabia and the Czech Republic are down more than 1%. Futures in the States point towards a huge gap down open for the cash market.
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COURSE: Learn How to Trade
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The dollar is down. Oil and copper are down. Gold is up; silver is down. Bonds are up. Bitcoin is down.
Stories/News from Seeking Alpha…
It appears as if Seeking Alpha is no longer giving their morning comments away for free…which means I can’t copy & paste it here. I’ll play around with it this weekend and see if this is the case. If so I’ll find a substitute.
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned to the downside. China, India and Australia did well, but Japan, Hong Kong, South Korea, Singapore, Thailand and the Philippines were weak. Europe, Africa and the Middle East currently lean up. Denmark, Poland, Germany, South Africa, Portugal and Sweden are doing well. Futures in the States point towards a slight up open for the cash market.
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COURSE: Learn How to Trade
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up. Bitcoin is up.
Stories/News from Seeking Alpha…
What were they thinking?
More details are coming together in the lead-up to DiDi Global’s (NYSE:DIDI) IPO on the New York Stock Exchange. The stock tumbled 20% yesterday to $12.49/share – just three sessions after the company went public – after China began a probe into the firm’s data practices and barred new users from its app. DIDI is down another 4% in premarket trade this morning, leading many to question how much was known before the ride-hailing giant raised $4.4B at a $67B valuation?
The underwriters: Wall Street banks including Goldman Sachs, Morgan Stanley and J.P. Morgan made about 2% on the total amount raised, or around $88M when spread out between them. Language about the risks of doing business in China starts on page 7 of the IPO prospectus, while regulatory and anti-monopoly warnings appear on page 11. While some say the disclaimers are enough, others expect a certain amount of deep expertise or specifics about the regulatory environment.
The company: DiDi “forced its way” to go public in New York without completing a thorough data security assessment by the Cyberspace Administration of China, the South China Morning Post reports. That prompted Beijing to suspend it from app stores and put it under a national security review. While the data assessment is not yet an institutionalized part of the listing process, and Didi said it had no foreknowledge about the security review, the company announced it will cooperate with Chinese authorities.
The investors: Should they have done more homework? Ahead of the IPO, several reports suggested China was ramping up pressure on its Internet companies, including DiDi, and was pushing more antitrust scrutiny of its homegrown tech firms. Back in April, Beijing also imposed sweeping restrictions on the fast-growing financial divisions of companies like DiDi, as well as stricter compliance on listing abroad, curbs on information monopolies and the gathering of personal data.
Tech in the lead again
The Nasdaq was the only major average to rise to a fresh all-time high on Tuesday after the S&P 500 snapped a seven-day winning streak. Cyclical shares also pulled back, while Big Tech stocks, like Amazon (AMZN), shined bright. The trend continued overnight, with Nasdaq futures rising 0.5% and contracts linked to the S&P 500 and Dow up 0.2% and 0.1%, respectively.
“It is really the tech space that’s been driving the market,” said Esty Dwek of Natixis Investment Solutions. “Over the next few weeks and months, hopefully we’ll see that U.S. growth is holding up well, that will continue to support markets.”
Fed minutes: The next catalyst for stocks and bonds will be released at 2 p.m. ET. The behind-the-door discussions are expected to be dovish as the central bank remains unconcerned about inflation trends and continues to look for progress in the labor market. Any signals of bond tapering will also be watched, which could signal a retreat from current easy policies.
Go deeper: The minutes will also be of particular interest to the bull forces which have taken control of the Treasury market. On Tuesday, the 10-year yield fell to its lowest level since February, while the 30-year yield tested its closely-watched 200-day moving average. At 1.34%, the 10-year yield is now even closer to 1% – than the 2% many analysts had forecast for the end of the year. Are investors pricing in a major risk from the OPEC+ crisis, which could see a price war-induced oil slump weigh on inflation estimates and support bonds?
The Alkaline Water Company (NASDAQ: WTER) is one of the hottest beverage stocks right now. That’s why Shaquille O’Neal just grabbed 7 million shares of its stock. Shaq’s stamp of approval comes as one of the company’s main competitors Essentia was bought out by Nestlé USA just last year. Analysts suspect The Alkaline Water Company could easily be the next big acquisition target for Big Beverage — something that could land investors substantial returns if they get in early enough.
Return of the JEDI
The Pentagon on Tuesday canceled its $10B Joint Enterprise Defense Infrastructure cloud contract, also known as JEDI, which had become a bone of contention between Amazon (AMZN) and Microsoft (MSFT). The deal aimed to provide the Defense Department with a centralized “secure cloud environment to rapidly access computing and storage capacity to address warfighting challenges at the speed of relevance.” It would also upgrade its technology for managing data located across thousands of networks and data centers.
Backdrop: Amazon Web Services was considered the frontrunner for the contract before the DoD handed it to Microsoft in 2019. AWS didn’t back down. The company alleged in a lawsuit that the award was tainted by then-President Trump’s animus against Jeff Bezos and related litigation threatened to delay the deal for years. There was also a slew of objections from Congress, prompting the Pentagon to acknowledge that advances in cloud computing and the timeframe of the contract could render the scheme obsolete.
“The evolving landscape is what has driven our thinking,” said John Sherman, the Pentagon’s acting chief information officer. “JEDI was the right approach at the time,” but with changing circumstances “we’re in a different place.”
Outlook: The Pentagon is now planning a multi-vendor approach, where more cloud providers including Google (GOOG, GOOGL), Oracle (NYSE:ORCL) and IBM (NYSE:IBM) will be allowed to bid for the new contract. The new deal, known as the Joint Warfighter Cloud Capability, is also scheduled to run no more than five years. Bidders are expected to be identified by about October, with the new contract expected to be awarded in spring 2022.
Incomplete non-compete
The White House is planning to publish an executive order this week focused on competition policy, according to several news outlets including the NYT. The action would urge the FTC to ban or limit non-compete agreements and encourage the agency to bar “unnecessary” occupational licensing restrictions. It could also embolden the FTC and DOJ to restrict the ability of employers to share information on worker pay or factor in how mergers might affect the ability to negotiate higher wages.
Fine print: The order hinges on the ability of regulators to write legislation that could survive legal challenges. Labor economists see many of the policies set at the state level – like licensing requirements – meaning they can only have a limited federal role.
“The president made clear during his campaign that he is committed to increasing competition in the American economy, including by banning non-compete agreements for workers and protecting farmers from abusive practices,” White House spokesperson Emilie Simons said earlier this month.
Note: While the executive order could be controversial among conservative lawmakers who favor less government intervention, some Republicans have opposed non-compete agreements. In 2019, Florida Sen. Marco Rubio introduced a bill to end the contracts for entry-level, low-wage workers. A labor shortage in the U.S. also has employers looking for millions of new workers, while tougher antitrust measures are receiving growing bipartisan support in Congress (like in the case of Big Tech).
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
2:00 PM FOMC Minutes
3:30 PM Fed’s Bostic Speech
Companies reporting earnings today »
What else is happening…
Short Hills’ Steve Weiss: ‘I would not own Chinese stocks again.’
Forever 21, Brooks Brothers owner Authentic Brands files for IPO.
Twitter (NYSE:TWTR) loses user content liability protection in India.
Chip boom! Samsung Electronics (OTC:SSNLF) sees 53% rise in Q2 profit.
Money flowing into oil, gas ETFs at highest rate in a decade.
Archegos fallout… Nomura (NYSE:NMR) pulls plug on part of hedge fund unit.
Newegg (NASDAQ:NEGG) soars as sold-out Nvidia GPUs appear in product lottery.
Universal (NASDAQ:CMCSA) moves its film license deal to Peacock from HBO.
Former Ford CEO: Tesla (NASDAQ:TSLA) facing increased competition in EV market.
Vaccines offer ‘best of both worlds’ for people who had COVID-19 – Scott Gottlieb.
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Good morning. Happy Tuesday. Hope you enjoyed your long weekend.
The Asian/Pacific markets leaned to the upside. Indonesia, Singapore, Thailand and the Philippines did well; New Zealand and Australia posted losses. Europe, Africa and the Middle East currently lean up. Denmark, Russia, Portugal, Sweden and the Czech Republic are up; the UAE is down. Futures in the States point towards a flat open for the cash market.
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COURSE: Learn How to Trade
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The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are up. Bitcoin is up.
Stories/News from Seeking Alpha…
Crisis for OPEC+
Saudi Arabia and the United Arab Emirates headed into the boxing ring for another round on Monday, before OPEC+ called it quits on a production deal. The unresolved spat between the long-time allies saw WTI crude soar another 2% to near $77/bbl, further squeezing an already tight oil market and raising concerns over inflation. At issue is the current terms of “baselines,” or the measure in which each country calculates its production cuts. The UAE feels its current level of 3.2M bpd from April 2020 is too low – and should be 3.8M bpd when the deal is extended into 2022 – but the Saudis and Russia have rejected any readjustments, fearing that other OPEC members will issue similar demands.
What’s at stake? Abu Dhabi is attempting to force the group to accept its request or risk unraveling the alliance. At the extremes of the equation, crude prices could make an outsized move in either direction. Failure to reach a deal could mean crude could rise even higher, but OPEC+ unity may also break down, risking a free-for-all that could send prices crashing. That scenario played out last year when a disagreement between Saudi Arabia and Russia prompted an oil price war. Months after the dispute was settled, the UAE stirred things up again by threatening to leave the cartel.
“Failing to come to a deal may provide some brief upside to the market, with reports that output would remain unchanged,” explained analysts at ING. “However, realistically it could also signal the beginning of the end for the broader deal, and so the risk that members start to increase output.”
Outlook: The tensions between Abu Dhabi and Riyadh are going beyond oil. While the UAE’s Crown Prince Mohammed bin Zayed and Saudi Crown Prince Mohammed bin Salman once had very close relations, the former has been flexing its own geopolitical aspirations via foreign policy moves towards countries like Israel and Yemen. The Saudis have also called for foreign companies to move their regional headquarters to Riyadh (many are now in Dubai), and following the OPEC standoff, the Kingdom moved to restrict citizens’ travel to the UAE.
China crackdown
Shares of DiDi Global (DIDI) are off 25% premarket to $11.60 as trading reopened after the July 4 holiday weekend. That’s also 17% below DiDi’s IPO price of $14, though many retail investors likely bought in a lot higher. Triggering the plunge was a Big Data crackdown by Beijing, which ordered U.S.-listed Chinese companies to be removed from app stores worldwide. While existing users can still use the apps, new subscribers have been halted while the Chinese probes are conducted.
DiDi said the app takedown in China “may have an adverse impact on its revenue in China,” but is striving to “rectify any problems, improve its risk prevention awareness and protect users’ privacy and data security.” Also off in premarket action are truck-hailing service Full Truck Alliance Co. (YMM) an online recruiting app Kanzhun (BZ), which are down 16% and 9%, respectively. Both companies went public in the U.S. in June.
Bigger picture: Fearful of their growing influence, China is in the middle of a sweeping crackdown on the nation’s biggest tech firms. Last November, Beijing pulled the planned IPO of fintech giant Ant Group, and in April, it hit Alibaba (BABA) with a record $2.8B fine over abusing its market dominance. In May, China’s antitrust regulator also ordered DiDi and nine other on-demand transport companies to overhaul their practices ranging from price hikes to driver treatment.
Current investigation: China’s cyber unit is commencing a review of DiDi and others to “prevent data security risks, safeguard national security and protect the public interest.” The Communist Party-backed Global Times also wrote that Didi appears to have the ability to conduct “big data analysis” of individual behaviors and habits, a feature that could require strict oversight by a government that is highly concerned with social control. Didi is the most dominant ride-hailing business in China, accounting for 88% of total trips in the fourth quarter of 2020.
The prospect of higher tax rates has investors rightfully concerned about their bottom line. Learn how to address unrealized gains in your portfolio and implement other tax-efficient investing strategies. Learn more.
At record highs
Futures linked to the Dow, S&P 500 and Nasdaq are hanging close to the flatline following a big week for the major averages, which notched fresh record highs in the wake of the U.S. jobs report. Nonfarm payrolls for June showed a strong gain of 850K on Friday, but there appeared to be enough concerns to keep the Fed from tapering its bond purchases (for now). While many expect the stock market gains to continue into the second half of 2020, others are more cautious.
Analyst commentary: “The U.S. economy is booming, but this is now a known and asset markets reflect it. What isn’t so clear anymore is at what price this growth will accrue,” said Michael Wilson, chief U.S. equity strategist at Morgan Stanley. “Higher costs mean lower profits, another reason why the overall equity market has been narrowing. Equity markets are likely to take a break this summer as things heat up.”
Traders are also preparing for a potentially more hawkish tilt at the Federal Reserve. Minutes from the FOMC tomorrow could give some clues on the direction of monetary policy, as well as the tapering timeline. Besides the behind-the-scenes discussions, many speculate additional remarks on QE and bond-buying could come at Jackson Hole in August.
Notable statistic: Over the past three months, 85% of all the quantitative easing worldwide had been conducted by the Fed and the ECB.
Effectiveness against Delta
Rising coronavirus cases in Israel, where much of the population is inoculated with the Pfizer (NYSE:PFE) vaccine, suggests the jab may be less effective in preventing mild illness from the Delta variant. However, it’s still “too early to precisely assess vaccine effectiveness,” according to Ran Balicer, chairman of Israel’s national expert panel on COVID-19. This is because exposure to the variant and the likelihood of being tested are not evenly distributed across the population, while there are still overall low number of cases among fully vaccinated Israelis.
By the numbers: Pfizer’s vaccine protected 64% of people against COVID-19 between June 6 and early July, down from a previous 94%. The figures coincided with the lifting of Israel’s virus restrictions, but also as Delta spread through the population. Effectiveness at preventing hospitalization and severe illness ticked down to 93%, compared with at least 97% in an earlier government study.
Back in January, Israel struck a vaccines-for-data deal with Pfizer that promised to share vast troves of information with the drug giant in exchange for the continued flow of COVID-19 shots. “Israel will be a global model state,” former Prime Minister Benjamin Netanyahu said at the time. “Israel will share with Pfizer and with the entire world the statistical data that will help develop strategies for defeating the coronavirus.” No funding was allotted for the agreement and the county even paid a sizable premium for vaccine doses.
Go deeper: So far, 5.2M Israelis (57%) have received at least one dose of Pfizer’s vaccine, while 5.6M (60%) have received both shots out of a population of about 9M. Israel has also surpassed 100K coronavirus inoculations of 12-16-year-olds, as well as 88% of the population above the age of 50, the group considered most at risk for serious cases. Helping to demonstrate the impact of the vaccine on an entire population is Israel’s highly digitized universal healthcare system, which requires everyone over the age of 18 to register with one of four HMOs.
Hackers up their prices
Colonial Pipeline paid $4.4M in Bitcoin to hackers (before recovering $2.3M). Brazilian meatpacker JBS ended up paying $11M. Now, hackers are demanding $70M to restore data held by companies hit by the latest cyberattack.
Backdrop: Up to 1,500 organizations were compromised by ransomware following an incident at U.S. IT firm Kaseya, which remotely controls programs for companies that manage internet services for businesses. The breach is believed to be affiliated with the Russian-linked REvil ransomware gang and is one of the single largest criminal ransomware sprees in history. In Sweden, at least 800 stores of supermarket chain Coop couldn’t open on Saturday after the attack knocked their cash registers offline.
“We’re not sure if it’s the Russians,” said President Biden, ordering a “deep dive” by U.S. intelligence officials on what happened in the attacks. “The initial thinking was, it was not the Russian government, but we’re not sure yet.”
Statement from the FBI: The agency is “investigating the situation and working with Kaseya, in coordination with CISA, to conduct outreach to possibly impacted victims. We encourage all who might be affected to employ the recommended mitigations and for users to follow Kaseya’s guidance to shut down VSA servers immediately. As always, we stand ready to assist any impacted entities.”
Today’s Economic Calendar
9:45 PMI Composite Final
10:00 ISM Service Index
12:30 PM Investor Movement Index
Companies reporting earnings today »
What else is happening…
Jeff Bezos steps down at Amazon (NASDAQ:AMZN), hands reins to Andy Jassy.
Carnival (NYSE:CCL) marks first cruise from U.S. port since the pandemic.
M&A volume expected to keep record pace in second half of 2021.
Boris Johnson outlines plans to ease Covid restrictions in the U.K.
CDC investigating case of teenager who died after Pfizer shot.
Contamination? Tyson (NYSE:TSN) recalls 8.5M pounds of chicken.
Big Tech may leave Hong Kong over data-protection laws.
Central banks pick up gold after yellow metal drops to decade lows.
Robinhood (HOOD) IPO: Six big risks to consider before buying.
BP (NYSE:BP) mulls withdrawal from Iraq – Reuters.
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