Before the Open (Jul 26-30)

Good morning. Happy Friday.

The Asian/Pacific markets posted sizeable losses. Japan, China, Hong Kong, South Korea, New Zealand, Malaysia, Indonesia, Thailand and the Philippines were very weak. Europe, Africa and the Middle East currently lean to the downside. The UK, Turkey, Germany, Russia, South Africa, Spain, the Netherlands and Portugal lead to the downside. Futures in the States point towards a relatively big gap down open for the cash market.

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

Stories/News from Seeking Alpha…

Debt drama

Gear up for the next big spectacle in Washington as the debt ceiling comes back into force this weekend following a two-year suspension. The deadline will curb the Treasury’s capacity to issue new debt unless lawmakers can reach an agreement, which seems far-fetched at the moment due to the Republican position. GOP leadership contends that Democrats are in a spending free for all and will only support raising the debt ceiling if they promise major spending reforms and cutbacks.

Analyst commentary: “It is a very slow moving train wreck,” outlined Gennadiy Goldberg, rates strategist at TD Securities. “The longer they delay raising the debt ceiling, the more Treasury has to [reduce] bill supply leaving less debt to invest in, particularly on a short-term basis. What you are going to see is more and more pressure on money market rates, which in turn will put pressure on money market funds.”

It’s already having some effects. Starting at noon today, the Treasury will use the first of its so-called “extraordinary measures,” which will suspend sales of securities that help states and municipalities invest bond proceeds. Others will take months to kick in, and starting in October or November, the Congressional Budget Office predicts the Treasury will run out of cash. While raising the debt ceiling has turned into a bitter partisan issue in recent years, both sides have always reached a late deal to avoid the country going into default.

Outlook: Many expect a similar scenario this time around and the game of chicken could continue in the coming months. However, if Democrats can’t get support from ten Republican senators, they may be forced to increase the debt limit via an upcoming budget reconciliation bill (which only needs a simple majority). They could also advance a vote to raise the debt ceiling along straight party lines before the August recess or tie the debt ceiling to a must-pass funding bill at the end of September.

Not enough

Amazon (AMZN) reported quarterly earnings after the bell on Thursday, with revenues that were 25% higher than the same period last year. While that’s pretty impressive in its own right, the percentage wasn’t high enough to match analyst expectations. The e-commerce behemoth finished the quarter with $113B in revenue, compared to consensus estimates of $115B, prompting shares to slump 7% in AH trading.

What it means: Amazon has historically exceeded expectations, so the revenue miss (the first since 2018) triggered some alarm on Wall Street. Amazon also said it would continue to see difficult comparisons to the pandemic quarters of 2020, meaning the era of the company’s bumper results may be slowing. It comes as people turn to their old shopping habits like traveling and dining out, which could weigh on the company’s rapid growth recorded through the pandemic.

“It’s still phenomenal growth when you think of the sheer size of the business,” said Brian Yarbrough, an analyst with Edward Jones. “Obviously the pandemic helped them, but they’re not going to be able to grow that rapidly on top of those numbers.”

Still doing quite well: Investors overlooked better-than-expected profits, as well as a strong performance in the advertising business and cloud division. Amazon Web Services sales increased 37% to $14.8B, above the $14.1B estimate, while the “Other” unit, which is primarily made up of advertising, grew revenue by 87% Y/Y to $7.9B. The numbers come just weeks after Andy Jassy, formerly chief executive of AWS, took the reins of the company, which has been growing exponentially and even more complex.

Closing out July

It’s the final trading day of the week (and month), but equities are not wearing their party hats. Nasdaq futures led the declines overnight, falling 1.2% after Q2 revenues at Amazon (AMZN) fell short, while the retail giant gave a weaker outlook. Pinterest (PINS) is also down 20% premarket after losing monthly users during the three months ended June 30 (and don’t forget the disappointing IPO from Robinhood (HOOD)).

Rally growing fragile? GDP data on Thursday suggested the pace of growth may be slowing. The U.S. economy expanded at a 6.5% annualized rate in Q2, but that was discouraging given expectations for 8.4% growth. Some are looking further into the data, seeing a larger-than-expected drag from the global supply chain shortages, which could mean an economic boom when the issues are finally ironed out.

“There are so many crosscurrents going on at the moment influencing markets,” said Sebastian Mackay, a multi-asset fund manager at Invesco. “We’ve entered a more volatile period for markets, but markets will continue to move higher because we’re still seeing economic growth.”

On the economic calendar: Inflation-focused investors will also get some clarity today. The Fed’s preferred inflation gauge, the personal consumption expenditures price index, will be published this morning at 8:30 a.m. ET. In the 12 months through June, the so-called PCE price index likely shot up 4.1%, with the core figure not far behind at 3.7% Y/Y.

Third vaccine dose?

Efficacy of Pfizer’s (NYSE:PFE) coronavirus vaccine, which is pegged at 96%, declines an average of 6% every two months, according to the company, and effectiveness in groups like the elderly and immunocompromised diminishes even more quickly. As a result, the drugmaker is recommending a third dose of its vaccine that can “strongly” boost protection against the Delta variant. Preliminary data (that has yet to be peer-reviewed or published) even suggests that levels of antibodies from a third booster increases antibody levels five to 10 times higher over its two-dose shots.

Bigger picture: Other frontrunners in the global immunization drive – AstraZeneca (NASDAQ:AZN) and Johnson & Johnson (NYSE:JNJ) – are yet to see the evidence to support the need for booster shots. The two take a similar approach in their COVID-19 vaccine technology, using viral vectors instead of the mRNA jabs produced by Pfizer and Moderna (NASDAQ:MRNA). “There are two dimensions to immunity – antibodies [which] decline over time, but the second, very important dimension of vaccination is the so-called T-cells. They tend to protect people against severe disease, but they also provide durability,” AstraZeneca CEO Pascal Soriot declared. “With the technology we use, we have very high production of T-cells. We’re hoping we can have a durable vaccine that protects for a long period of time.”

While Pfizer intends to seek emergency use authorization for a third dose as soon as next month, the FDA and CDC currently feel that an additional dose is not necessary since Americans “who are fully vaccinated are protected from severe disease and death.” US Surgeon General Dr. Vivek Murthy echoed the view this week, saying, “people do not need to go out and get a booster shot.” Should the dose be approved by the FDA, the vaccine would either need to be amended or, if the vaccine were fully FDA approved, a third dose could be given off label.

Will it be the same formula? The July study conducted by Pfizer involved a third dose of its existing vaccine, but the drugmaker is also exploring whether to add an additional dose it has developed to target the Beta variant. Moderna is meanwhile testing three different booster strategies: a half-dose of the existing vaccine, an additional dose of a new vaccine that targets the Beta variant, and another dose that combines the two. Pfizer is expected to generate $33.5B in COVID-19 vaccine revenue in 2021 and Wall Street analysts have already priced boosters into their financial models for the company and BioNTech (NASDAQ:BNTX), which helped develop the vaccine with Pfizer.

Over in Israel: The country’s health ministry this week recommended booster shots for older adults and to those with weak immune systems, becoming one of the first nations in the world to formally approve a third dose of Pfizer’s vaccine. According to the ministry, a full course of the Pfizer vaccine was just 39% effective at preventing infections caused by the Delta variant, though the vaccine provided high levels of protection against hospitalization (92%) and severe illness (91%). Back in January, Israel struck a vaccines-for-data deal with Pfizer that promised to share vast troves of information from its highly digitized healthcare system in exchange for the continued flow of COVID-19 shots.

Today’s Economic Calendar
8:30 Personal Income and Outlays
8:30 Employment Cost Index
9:00 Fed’s Bullard: U.S. Economy and Monetary Policy
9:45 Chicago PMI
10:00 Consumer Sentiment
1:00 PM Baker-Hughes Rig Count
3:00 PM Farm Prices
8:30 PM Fed’s Brainard Speech

Companies reporting earnings today »

What else is happening…

Robinhood (HOOD) has worst debut ever for IPO of its size.

Procter & Gamble (NYSE:PG) names COO Jon Moeller as new CEO

Nikola (NASDAQ:NKLA) tumbles after founder Trevor Milton charged with fraud.

Disney (NYSE:DIS) fires back at Scarlett Johansson’s Black Widow lawsuit.

Male grooming startup Manscaped reportedly in talks to go public.

CRISPR (NASDAQ:CRSP) soars after massive earnings beat.

Pinterest (NYSE:PINS) tumbles after posting low user figures.

AI Day reveal by Musk recharges the Tesla (TSLA) bulls.

NASA scrubs Boeing (NYSE:BA) Starliner launch after Space Station mishap.

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Good morning. Happy Thursday.

The Asian/Pacific markets were mostly up. Japan, China, Hong Kong, New Zealand, Taiwan and Singapore posted solid gains. Europe, Africa and the Middle East currently lean up. The Uk, France, Turkey, the UAE, South Africa, Finland, Hungary, Spain, the Netherlands, Italy and Austria are leading. Futures in the States point towards a positive open for the cash market.

BLOG: The Top 25 NDX Stocks Will Tell Us Everything We Need to Know

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

Stories/News from Seeking Alpha…

Democratizing finance for all

It was set to be one of the year’s most highly anticipated listings, but Robinhood Markets may have to do more to convince investors to scoop up its shares. The stock trading app, which has surged in popularity among retail investors, priced its IPO at $38 on Wednesday – at the low end of a marketed range – and will begin trading on the Nasdaq today under ticker symbol “HOOD.” It also detailed plans to reserve up to 35% of shares for users of its app, which could purchase the stock at the IPO price through a new product called IPO Access.

Backdrop: Robinhood busted onto the brokerage scene back in 2013 with a mission to democratize the investing landscape. It has experienced tremendous growth in recent years and eventually prompted competitors like TD Ameritrade (NYSE:SCHW), Charles Schwab (SCHW) and E-Trade (NYSE:MS) to adopt its model of zero-commission trades. The coronavirus pandemic was also a boon for the app as homebound people turned to online trading, while a stampede of investors that have jumped into “meme stocks” and cryptocurrencies has continued to propel its popularity.

By the numbers: Selling 55M shares in the offering at a price of $38, Robinhood would raise slightly over $2B (at a valuation of nearly $32B). Users have more than doubled to 18M over the 12 months through March, while revenue more than quadrupled over the same time period to $1.4B. However, meme-stock madness has led to big losses of late and the company agreed to pay $70M to settle a FINRA probe in June. Options trading accounts for about 38% of Robinhood’s revenue, while equities and crypto are 25% and 17% of sales, respectively.

Advantages: Growth is off the charts and half of all brokerage accounts opened in the U.S. from 2016 to 2021 have been set up on Robinhood. The company is also hoping to expand into other initiatives, like IRAs and Roth IRAs, to help turn short-term investors into long-term ones. It could also offer other types of services like debit cards, credit cards, car loans and crypto wallets.

Risks: The app has been in the regulatory spotlight over gamification, which encourages users to trade more via rewards and celebratory notifications. Payment for order flow, the way Robinhood makes money, has additionally come under intense scrutiny, as it could create conflicts of interest and prevent investors from getting the best price for their trades. Retail investing could also slow and the Robinhood prospectus named seven U.S. state and federal bodies investigating the app.

Outlook: 2021 hasn’t been a good year for big IPOs in the U.S. Among companies that have raised more than $2B – including AppLovin (APP), Bumble (BMBL), Coupang (CPNG), DiDi (DIDI), Playtika (PLTK) and Shoals (SHLS) – all are down by double digit percentages since their first close. The Renaissance IPO ETF (NYSEARCA:IPO) is also off 19% from its February highs and down more than 5% YTD. That could signal that the market is having a harder time digesting bigger deals – amid a glut of massive equity issuances – and may deter investors from buying more IPOs if they are already underwater.

Not there yet

Investors continue to size up comments from Jerome Powell after the Fed concluded its two-day meeting by keeping interest rates in a target range between zero and 0.25%. No move was made on asset purchases, and while the economy is “making progress” toward its goals, it has ways to go before the central bank will adjust its easy policies. “We have some ground to cover on the labor market side,” Powell declared. “I would want to see some strong job numbers.” Overnight: Dow +0.4%; S&P 500 +0.1%; Nasdaq -0.3%.

Bigger picture: With the Fed tiptoed around the subject of tapering, markets will be looking to the Jackson Hole gathering in August for some clarity. The conference should also provide updates on whether the Fed will continue to allow inflation to run hotter than usual. Powell additionally relayed his views on the Delta variant, which is rapidly spreading across the world and the U.S.

“What we’ve seen is with successive waves of COVID over the past year and some months now, there has tended to be less in the way of economic implications from each wave,” Powell announced at his post-meeting news conference. “We will see if that is the case from the Delta variety,” but later said, “We’ve kind of learned to live with it.”

On the economic calendar: Amazon (AMZN) is set to report earnings after the bell, with analysts watching e-commerce numbers during the current stage of the pandemic. The U.S. economy is also forecast to have grown at the strongest pace of the year, with Q2 data this morning expected to show GDP expanding at an annual rate of 8.4%. A bipartisan group of lawmakers meanwhile struck a deal on a roughly $1T infrastructure package, sending the agreement past its first procedural hurdle with a 67-32 vote in the Senate.

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Into the Metaverse

Shares of Facebook (FB) slipped almost 4% in AH trading on Thursday despite logging another easy earnings beat for the tech sector this season. Like its peers, the social media company posted a hefty revenue increase of 56% Y/Y to $29B, higher than the high-end analyst estimate. It’s another linchpin in the robust advertising recovery story, but investors treaded carefully as user numbers only came in line with expectations.

Bigger picture: Monthly active users of 2.9B rose 7.4% from the same period a year ago, as expected, while daily active users gained as forecast, +6.7% to 1.91B. As with Google (GOOG, GOOGL), Facebook warned that revenue growth would “decelerate significantly” as it “lapped periods of increasingly strong growth.” Looking at a two-year comparison, it expects revenue growth to decelerate “modestly” compared to Q2’s rate, but also expects ad targeting headwinds this year from “regulatory and platform changes, notably the recent iOS updates.”

On a subsequent earnings call, CEO Mark Zuckerberg sounded a tone that was aimed toward the future, instead of looking back. Three key themes were discussed: creators, commerce and “building the next computing platform” (i.e. developed from AI, machine learning and VR). Facebook will invest $1B and keep creator tools free to use through 2023 and “work our way down the stack and build world class services at every layer of commerce.” He also noted that video has become the primary way in which users interact with the platform, accounting for almost half of all time spent on Facebook (Reels is also the largest contributor to engagement growth on Instagram).

Into the Metaverse: “The metaverse is a virtual environment where you can be present with people in digital spaces. You can kind of think of this as an embodied Internet that you’re inside of, rather than just looking at,” according to Zuckerberg. “We believe this is going to be the successor of the mobile Internet… the defining quality of the metaverse is presence: creation, avatars, and digital objects. In addition to being the next generation of the Internet, the metaverse is also going to be the next chapter of us as a company.”

Masks and vaccines

Corporate America is making moves after fresh guidance from the CDC that recommended fully vaccinated people and kids should wear face coverings indoors – in areas with substantial and high levels of COVID-19 transmission. Twitter (NYSE:TWTR) is closing its offices in New York and San Francisco, just two weeks after the social media firm reopened in both cities. Facebook (NASDAQ:FB) is separately requiring its U.S. workers that return to the office to be vaccinated and Google (GOOG, GOOGL) has also jumped aboard that train.

Over in Hollywood: Netflix (NASDAQ:NFLX) has become the first major studio to introduce a blanket policy mandating vaccinations for the casts of all of its U.S. productions, according to Deadline. The requirement will also cover any crews that come into contact with them, which are known as “Zone A” workers. All staff in that category will be required to show proof of vaccination, with few policy exemptions like medical, religious and age reasons.

The news comes before President Biden is expected to announce that all civilian federal workers will need to be vaccinated against COVID-19 or face regular testing, social distancing, mask requirements and travel limits. The announcement will come at 4 p.m. this afternoon and cover 2.18M civilian employees (and possibly another 570K USPS workers). Meanwhile, Apple (NASDAQ:AAPL) is re-instituting a mask mandate at most of its U.S. retail stores, while Disney’s (NYSE:DIS) domestic theme parks will require all parkgoers to wear masks indoors starting Friday.

Analyst commentary: The Delta variant is a tougher investment risk to peg than inflation, declared macro strategist Jim Bianco. “You could see a big rotation away from the reopening stocks or can take a playbook out of last year and say ‘If we get rising variant and we get restrictions, more stimulus money is coming.’ And, what have we learned about stimulus money? It goes right into the brokerage account. It goes right into the stock market.”

Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 GDP Q2
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
1:00 PM Results of $62B, 7-Year Note Auction
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening…

China stocks close higher after some market reassurance.

Reservations for Ford’s (NYSE:F) F-150 Lightning top 120,000.

EV battery stocks charge up as infrastructure bill advances.

Activision Blizzard (NASDAQ:ATVI) CEO pledges action after ‘tone deaf’ response.

Boeing (NYSE:BA) surges after showing first profit in nearly two years.

Qualcomm (NASDAQ:QCOM) 5G strength drives FQ3 beats, upside profit forecast.

PayPal (NASDAQ:PYPL) comes in light on revenue, soft Q3 outlook.

Pfizer (NYSE:PFE) ‘very, very confident’ booster will protect against Delta variant.

DiDi losses… Uber (NYSE:UBER) falls on report of Softbank selling one-third stake.


Good morning. Happy Wednesday.

The Asian/Pacific markets were mostly weak. Hong Kong did well, but Japan, China, Taiwan, Australia, Thailand and the Philippines did poorly. Europe, Africa and the Middle East currently lean up. Denmark, Poland, France, Italy, Portugal, Russia, South Africa and Israel are leading. Futures in the States point towards a slight up open for the cash market.

BLOG: The Top 25 NDX Stocks Will Tell Us Everything We Need to Know

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

Stories/News from Seeking Alpha…

Masks are back

Pointing to the Delta variant and a high number of unvaccinated individuals, the CDC has reversed its indoor mask policy, saying fully vaccinated people and kids should wear face coverings indoors. New data from the agency apparently suggests that fully vaccinated individuals can carry high enough viral loads that can infect other people because Delta behaves “uniquely differently from past strains of the virus.” Guidance from the CDC is only a recommendation, meaning states and local officials will have to decide whether to reintroduce mask rules.

Across the country: Some regions have already recommended or required that residents resume wearing masks indoors, including 17 counties in California and Clark County, Nevada, which houses Las Vegas casinos. Localities from New Orleans, Louisiana, to Provincetown, Massachusetts, have also issued an “indoor mask advisory” regardless of vaccination status. The updated guidance comes ahead of the fall season, when Delta is expected to cause another surge as employers bring workers back to the office and kids head back to school.

“More vaccinations and mask wearing in the areas most impacted by the Delta variant will enable us to avoid the kind of lockdowns, shutdowns, school closures, and disruptions we faced in 2020,” President Biden said following the CDC guidance. He’s also expected to lay out additional steps today to get more Americans jabbed. Among them will be a requirement that all federal employees and contractors be vaccinated against COVID-19, or be required to submit to regular testing and mitigation requirements.

It’s confusing: While higher rates of transmission have been seen in areas that are less vaccinated, like much of the U.S. South and Western states, other data has shown conflicting outcomes. The Bay Area News Group found that five California counties, Los Angeles, San Diego, Alameda, Contra Costa, and San Francisco, had both a higher percentage of people who are fully vaccinated than the state average and a higher average daily case rate. That compares to five other California counties, like Modoc, Glenn, Lassen, Del Norte, and San Benito, which have below-average vaccination rates and decreasing case rates. Before the Delta variant, vaccines were previously thought to reduce COVID-19 transmission, but several factors may also be playing a part in the latest analysis like population density and willingness to be tested.

Statistics: The weekly average of new daily COVID-19 infections in the U.S. is more than 57,000, an increase of 65% from the week prior, according to data from Johns Hopkins University.

Big quarter for Big Tech

Apple: A blowout quarter from the iPhone maker shattered expectations, with earnings of $1.30 per share (vs. $1.01 estimated) on revenues of $81.4B (vs. $73.3B). Every one of Apple’s (AAPL) major product lines grew over 12% on an annual basis, while it saw “very strong double-digit increases in both [iPhone] upgraders and switchers during the quarter.” Shares still fell 2.2% in AH trading after the company warned that sales growth may be slowing and chip shortages will affect production in the current quarter. Apple also declined to provide formal guidance for the sixth quarter in a row, a practice it adopted during the coronavirus pandemic.

Google: Shares of parent Alphabet (GOOG, GOOGL) jumped 3.3% in extended trading after advertising revenue soared 69% Y/Y to $50.4B. CEO Sundar Pichai credited the number to a “rising tide of online activity in many parts of the world,” though longer-term trends were harder to forecast as markets reopen and COVID-19 cases continue to rise. Google Search soared 69% Y/Y to $35.85B in sales, Cloud revenue climbed 54% to $4.63B and YouTube ad sales surged 84% to $7B.

Microsoft: The stock inched up 0.5% AH after ending its financial year on a strong note. Microsoft (MSFT) reported a 21% jump in revenue amid a flood of new business in Azure cloud computing, LinkedIn advertising and business applications. It didn’t stop there. Microsoft’s “More Personal Computing” segment, which features Windows, as well as devices, gaming and search advertising, notched $14.09B in FQ4 revenue, while the tech giant finished the year with $60B in annual earnings (and $165B in sales) for the first time ever.

Facebook: The social network is expected to report a surge in quarterly revenue after today’s closing bell as the pandemic drove consumers to shop and spend more time online. Despite advertising demand, Facebook (FB) still projects revenue growth year-over-year to slow in the last two quarters of the year. Also watch out how Apple’s recent software update – which allows users to opt out of tracking in iOS apps – will impact its bottom line, as well as user retention, e-commerce ambitions and updates to Instagram and WhatsApp.

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Fed policy update

Wall Street snapped a five-session winning streak on Tuesday before a policy decision from the Federal Reserve, though things looked better in the overnight session. Nasdaq futures are ahead by 0.3% following some blowout results from Big Tech, while contracts linked to the S&P 500 and Dow were up 0.2% and flat, respectively. “I wouldn’t write this off to anything more than taking a little bit of a breather after the pretty good rally that we saw last week,” said Jason Vaillancourt of Putnam Investments.

Fed in focus: While no action is expected from the FOMC today, there may be a possible mention of tapering the central bank’s bond program. That could shake up some investing sentiment as the winding down of purchases is seen as the first step toward interest rate hikes (especially with inflation heating up). The Fed is currently purchasing $120B in securities a month, including $80B in Treasury bonds and $40B in mortgage-backed securities.

Meanwhile, the busiest week of earnings season will continue today with results from Boeing (BA), Pfizer (PFE), McDonald’s (MCD), Facebook (FB), Ford (F), Qualcomm (QCOM) and PayPal (PYPL). Of the S&P 500 companies that have already reported Q2 numbers, 89% have topped earnings estimates, while 86% have exceeded revenue expectations, according to data from Refinitiv.

Go deeper: There’s more important economic news coming up this week. Gross domestic product for the second quarter will be released tomorrow, as well as weekly jobless claims. On Friday, the Fed will publish the personal consumption expenditure index, which is the central bank’s preferred measure for inflation.

‘Walkout for Equality’

Employees at Activision Blizzard (ATVI) are planning a walkout today at 10 a.m. PT/1 p.m. ET, which will take place outside headquarters in Irvine, California. Fallout is growing over the company’s values after California legislators sued Activision Blizzard, citing “pervasive ‘frat boy’ culture” and mistreatment of women. Some are even likening the developments to a #MeToo movement for the video game industry.

Backdrop: A two-year investigation into the firm claimed that female employees (who make up 20% of Blizzard’s workforce of about 9,500) were routinely discriminated against. The actions included verbal and physical advances from male co-workers, as well as allegations that women employees were underpaid, promoted “more slowly,” and terminated “more quickly” compared to their male counterparts. Not helping the situation is the compensation package of Activision CEO Bobby Kotick, who was the second-highest paid CEO in the S&P 500 in 2020.

Activision Blizzard has called the lawsuit “irresponsible behavior from unaccountable State bureaucrats that are driving many of the State’s best businesses out of California.” That didn’t go over too well. An employee letter called the response “abhorrent and insulting,” with workers and former staff taking to social media in droves with their own stories about company culture. “We believe that our values as employees are not being accurately reflected in the words and actions of our leadership,” they wrote before the walkout.

Outlook: Workers are issuing four demands: (1) an end to forced arbitration clauses in employee contracts; (2) new hiring and promotion processes to increase representation; (3) publishing salary and promotion data for all employees; (4) allowing a diversity, equity and inclusion task force to hire a third party to audit executive staff.

Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 International Trade in Goods (Advance)
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $28B, 2-Year FRN Auction
2:00 PM FOMC Announcement
2:30 PM Chairman Press Conference

What else is happening…

Cathie Wood clears nearly all Chinese tech stocks from ARK portfolios.

China Internet ETF (NYSEARCA:KWEB) plummets 14-month low in just four days.

Congress to vote on marijuana, psychedelics and CBD amendments.

GE (NYSE:GE) working to mitigate supply constraints and higher costs.

AMD (NASDAQ:AMD) moves higher after Q2 beats, raises sales forecast.

Grill giant Weber (WEBR) releases details on multi-billion-dollar IPO.

Starbucks (NASDAQ:SBUX) to exit South Korea venture valued at over $2B.

Mattel (NASDAQ:MAT) jumps after raising growth expectations to double digits.

GameStop (NYSE:GME) makes a move into MidCap 400 from the SmallCap 600.


Good morning. Happy Tuesday.

The Asian/Pacific markets were mixed. Japan, Australia and the Philippines did well. China and Hong Kong suffered big losses. India, New Zealand and Thailand were also weak. Europe, Africa and the Middle East are currently mostly down. Turkey and Greece are doing well, but the UK, Poland, France, Germany, South Africa, Finland, Norway, Spain, the Netherlands, Italy, Portugal and Austria are weak. Futures in the States point towards a down open for the cash market.

BLOG: The Top 25 NDX Stocks Will Tell Us Everything We Need to Know

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

Stories/News from Seeking Alpha…

China wipeout

Sweeping crackdowns across China are continuing to send shockwaves across financial markets, with investors finding themselves in the firing line of some of the nation’s hottest sectors. Shares of Tencent (OTCPK:TCEHY) fell 10% on Monday after Beijing ordered the company to give up exclusive music licensing rights, food delivery companies such as Meituan (OTCPK:MPNGY) were also targeted, while education stocks like TAL Education (NYSE:TAL), New Oriental (NYSE:EDU) and Gaotu Techedu (NYSE:GOTU) slumped about 25% each amid a ban on for-profit tutoring. In fact, the Nasdaq Golden Dragon China Index – which tracks 98 of China’s largest firms listed in the U.S. – dropped 8.5% on Friday and another 7% on Monday, marking the biggest two-day selloff since ’08.

Analyst commentary: “Even when you think China risk is priced, it can get worse,” Goldman Sachs wrote in a research note. “The government could come down much harsher than expected penalties for Tencent, they could implement much stricter social insurance programs for delivery drivers/temp employees, they could crack down on other industries viewed as a threat to social cohesion (SFV? Livestreaming? Who knows.)”

While Beijing has tolerated conventional regulations on certain sectors in the past, the government now looks ready to kill whole companies or entire industries. One doesn’t have to look far to the recent pulling of Ant Group’s (NYSE:BABA) IPO or the DiDi Global (NYSE:DIDI) fiasco that shook the investing world earlier this month. China has pointed to financial risk, antitrust concerns and national security violations, but its acceptance of stockholder pain for long-term social control appears to have some market participants reassessing Xi Jinping’s Communist Party.

Outlook: Investors aren’t the only ones reviewing their relationship with China. Another contentious meeting between Washington and Beijing proved unsuccessful on Monday, with Vice Foreign Minister Xie Feng saying the relationship was at a “dead end” and risks “serious consequences.” He even presented U.S. Deputy Secretary of State Wendy Sherman with two lists of “red lines” that were necessary to stabilize ties, including “U.S. wrongdoings that must stop” and “key individual cases that China has concerns with.”

Earnings influence

U.S. stock futures started the week on the back foot on Monday, before things turned green and the major averages reached new highs. Will the same occur today? At the time of writing, Dow futures are off 0.5%, while contracts linked to the S&P 500 are down 0.4% and 0.3%, respectively. Fresh highs today would result in a six-day win streak on Wall Street and the latest slew of earnings could be enough to power the next leg of the journey.

Snapshot: Industrial heavyweights General Electric (GE) and 3M (MMM) are scheduled to report this morning, but the presentation will quickly turn into a tech show after the close. Apple (AAPL) is likely to post impressive results as demand remained strong for its 5G iPhones, though analysts will be watching if the global chip shortage will continue to affect sales in the coming quarters. Google parent Alphabet (GOOG, GOOGL) is meanwhile set to benefit from a recovery in ad spend (which was dented by the coronavirus pandemic) and don’t forget to look out for other tech earnings like Microsoft (MSFT) and AMD (AMD).

“It appears that we’re going to get really solid earnings from these companies and that should give a little bit of a boost to the market,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments. “Some of these names have already run so much this year that perhaps we don’t get a large bounce.”

On the economic calendar: Investors are waiting for the Fed’s view of inflation and monetary policy as the FOMC convenes its latest meeting today. It also takes place as the rapidly spreading Delta virus variant spurs concerns about the economic outlook. Meanwhile, Senate Majority Leader Chuck Schumer related that lawmakers may stay in session through the weekend to finish a bill on infrastructure, which is one of the pillars of President Biden’s massive economic agenda.

Tesla results

Shares of Tesla (NASDAQ:TSLA) stayed positive after better-than-expected Q2 earnings, with the stock climbing 1.1% to $664 in AH trading on Monday. Not only did the company mark the eighth straight quarter of profit, but it also exceeded $1B of GAAP net income for the first time in its history. The EV maker produced 206,421 cars in Q2 (+151% Y/Y), delivered 201,304 vehicles (+121%) and ended the quarter with a cash position of $16.2B.

On the operations side: Gigafactory Shanghai saw minor interruptions due to supply chain challenges and factory upgrades, but production there was said to have remained strong. European demand also remained well above supply, resulting in growing wait times for delivery. “We continue installing equipment, have begun testing tools and are working as quickly as possible toward starting production in Berlin, while growing import volumes in the interim,” Tesla said in a statement.

Buoyed by strong demand, the EV pioneer stuck with a multi-year deliveries view for 50% average annual growth. Tesla also forecast that operating margin will continue to grow over time to reach industry-leading levels after capacity expansion and localization plans kick in. However, Bitcoin-related impairments of $23M were reported for the quarter as crypto prices plunged, but the drop in the value won’t affect earnings as long as Tesla hasn’t divested its holdings.

Musk goes offline: The Technoking of Tesla said he may skip future earnings calls – unless he has something big to announce – but had some highlights for investors this time around. “The global chip shortage situation remains quite serious. It does seem like it’s getting better, but it’s hard to predict.” He also delayed the Tesla Semi to 2022, left vague the start of production of the Cybertruck, but said the company’s full self-driving subscription could be a significant factor in as early as 2022.

Going green

Filing for its first Sustainability Report on record, Boeing (BA) said it aims to “significantly reduce its environmental impact during every stage of a product’s life cycle.” The document makes the U.S. planemaker the latest company to report Scope 3 emissions that result when customers use their products. Commercial planes Boeing delivers in 2020 will be responsible for emissions equivalent to 158M metric tons of CO2 over their lifespan, consisting of 136M tons of CO2 of emissions directly linked to their operation by airlines and 22M tons related to the production by energy companies of the fuel used in flight.

Quote: “We know there’s still work to do and are committed to communicating our progress and holding ourselves accountable to ensure the aerospace industry is safe and sustainable for generations to come,” Boeing Chief Sustainability Officer Chris Raymond declared.

Bottom line: Boeing will deliver commercial airplanes capable of flying on 100% sustainable aviation fuels by 2030, rather than the maximum 50% ratio of SAF to conventional jet fuel blend for commercial passenger flights today. Among other steps, Boeing said it is advancing flight tests for its all-electric, self-flying Cora air taxi. It also commits to achieving net-zero carbon emissions at work sites, reducing energy consumption by 12%, water use by 23%, solid waste by 44% and hazardous waste by 34%.

Vaccine mandates

An increasing number of districts and cities have already imposed fresh mask mandates, but a surge in Delta cases is prompting several localities to go one step further. California will soon require state employees and all healthcare workers to provide proof of COVID-19 inoculation or get tested at least once a week, according to Governor Gavin Newsom. 246,000 state employees in the Golden State will be impacted by the order, as well as 2M healthcare workers in the public and private sectors.

“We’re at a point in this epidemic, this pandemic, where individuals’ choice not to get vaccinated is now impacting the rest of us in a profound and devastating and deadly way,” Newsom told a press conference.

He’s not alone: Prior to the announcement, NYC Mayor Bill de Blasio said that all city workers will need to be vaccinated or agree to weekly testing by September 13. The Department of Veterans Affairs, which runs one of the nation’s largest health systems, also said it would mandate coronavirus jabs for its 115,000 front-line workers. That’s the first federal agency to require COVID vaccines and some say it could be a new chapter in the pandemic after public health experts appealed to the population by offering a range of incentives.

Thought bubble: Can your employer legally fire you if you refuse to get a COVID vaccine? Yes, but most companies or government agencies have previously given that decision to their employees (especially with vaccines under FDA emergency approval). If mandated, only a few exceptions would be permitted under law, such as medical reasons, the workforce is unionized, or if taking it is against a “sincerely held” religious belief.

Today’s Economic Calendar
FOMC meeting begins
8:30 Durable Goods
8:55 Redbook Chain Store Sales
9:00 S&P CoreLogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:00 Richmond Fed Mfg.
1:00 PM Results of $61B,5-Year Note Auction
1:00 PM Money Supply

Companies reporting earnings today »

Today’s Economic Calendar

Bitcoin (BTC-USD) drops after Amazon (NASDAQ:AMZN) denies crypto payment reports.

Olympic ratings slip from 2016, but still dominate TV.

Lucid Motors (NASDAQ:LCID) stock soars in splashy Nasdaq debut.

COVID vaccine trials for children expanded to detect rare side effects.

Sinovac’s (NASDAQ:SVA) COVID-19 vaccine antibodies fade after six months.

Aon (NYSE:AON), Willis Towers (NASDAQ:WLTW) scrap merger amid DOJ trouble.

Intel (INTC) sets plan to regain standing as world’s top chip company.

American Airlines (NASDAQ:AAL) warns about jet fuel shortages.

EPA to seek stricter limits on toxic waste from coal power plants.

Facebook (NASDAQ:FB) explores Oculus workouts with Apple (NASDAQ:AAPL) Health app.


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

The Asian/Pacific markets were weak. Japan did well, but China, Hong Kong and the Philippines were down big and South Korea, Taiwan, Malaysia, Singapore and New Zealand posted moderate losses. Europe, Africa and the Middle East are currently mixed, and other than Austria (up 1.2%), there were no other 1% movers. Futures in the States point towards a negative open for the cash market.

My interview with

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

Stories/News from Seeking Alpha…

Earnings in high gear

Investors are gearing up for one of the most eventful weeks of the summer, with futures ticking lower ahead of the busy slate. At the time of writing, Dow futures are off 0.5%, while contracts linked to the S&P 500 and Nasdaq are down 0.3% and 0.1%, respectively. The Fed is scheduled to meet on Wednesday (tapering or inflation comments?), we’ll get a print on Q2 GDP (exceeding its pre-pandemic size?), while lawmakers hope to advance an infrastructure deal to a Senate vote (resolving a dispute over public-transit funding?)

Don’t forget earnings! About 165 S&P 500 companies are due to report in the biggest week of the season. Tech heavyweights like Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Facebook (FB) and Microsoft (MSFT) will take the spotlight, with the five companies comprising more than a fifth of the total market cap of the S&P 500. The results should illustrate how large businesses are withstanding the pandemic and a recent uptick in inflation.

“This will be a choppy environment for the rest of the year as markets deal with growth that isn’t as strong, and markets turn to the potential withdrawal of policy support,” said Hugh Gimber, a strategist at J.P. Morgan Asset Management. “You would expect that the spread of the Delta variant would put restrictions in place longer and some supply bottlenecks may not last just a few months.”

Going abroad: Chinese regulatory worries resurfaced overnight as Beijing took aim at some of the country’s fast-growing listed companies. Shares of private education firms listed in Hong Kong tumbled as Chinese authorities clamped down on the sector, while the national antitrust authority ordered Tencent (OTCPK:TCEHY) to give up some of its exclusive music licensing rights. By the end of the session, the Shanghai Composite Index dropped 2.3%, while the Hang Seng Index sank nearly 4% for its biggest one-day rout in over a year.

Bitcoin breakout

Sentiment on Bitcoin (BTC-USD) turned bullish over the weekend as the world’s most popular cryptocurrency topped its 50-day moving average. The positive momentum sent Bitcoin up 12.5% to $39,850 on Monday, its highest level since mid-June and within sight of a $41,341 resistance. Other cryptos are also on the march higher, including Ethereum (ETH-USD), up 8.8% to $2,367, and Ripple (XRP-USD), ahead by 9.6% to $0.67.

What happened? Optimism is still running high from the last week’s “B Word” event, where Ark Invest’s Cathie Wood and Square’s (SQ) Jack Dorsey touted the potential for Bitcoin and encouraged corporations to add the asset to their balance sheets. Tesla’s Elon Musk also disclosed that SpaceX (SPACE) owns Bitcoin and that he wants the world’s largest crypto “to succeed.” Meanwhile, environmental concerns over mining and Chinese regulatory worries appear to have worn off, while traders are exiting bets on declines at a record pace.

“With a record $1.2B in shorts liquidated over the past 24 hours, the outlook and momentum for the week ahead are positive,” declared Ryan Rabaglia, global head of trading at digital asset platform OSL. “Over the last five trading sessions we’ve seen general near-term bullishness in the market, driven by key technicals, as well as recent positive comments.”

Go deeper: Amazon is said to be looking at accepting Bitcoin payments by the end of the year and is exploring its own token for 2022. According to City A.M., the e-commerce behemoth is expected to take Ethereum, Cardano (ADA-USD) and Bitcoin Cash (BCH-USD) as payment before the company brings another eight or so of the most popular cryptos online. Last week, Amazon even advertised a job vacancy for a digital currency product lead, possibly signaling further plans to accept cryptocurrency.

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Delta surge

New daily COVID-19 cases in the U.S. have averaged more than 49,300 over the week ending Friday, according to data from Johns Hopkins University. That’s an increase of nearly 60% from a week ago, and 4x the lowest 2021 average of 11,299 recorded on June 22. COVID-related hospital admissions have also surged in the country, with 680 hospitalizations on Saturday, more than double the number two weeks ago.

Snapshot: 68.8% of U.S. adults have received at least one COVID-19 shot, while the proportion of fully immunized adults stands at 59.9% nationally. A new poll from the Associated Press-NORC also suggests that the majority of unvaccinated American adults are unlikely to get COVID-19 shots amid concerns that they do not offer protection against the highly contagious Delta variant. Delta now accounts for over 83% of newly sequenced COVID-19 cases in the U.S., per CDC director Rochelle Walensky.

Meanwhile, Pfizer (NYSE:PFE) said earlier this month it is starting to see waning immunity from its two-dose vaccine, and now plans to seek authorization from the FDA for a booster dose. The first of those boosters would go Americans who are immune compromised, White House chief medical advisor Dr. Anthony Fauci announced on Sunday. “We’re going in the wrong direction,” he added, saying that the recommendation of mask wearing by the vaccinated is “under active consideration.”

More data: 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. The latest numbers suggest that the effectiveness of the jab from Pfizer in preventing infection has dropped to 39% in the country – which has one of the highest vaccination rates in the world – though the results could be skewed due to the different ways of testing the vaccinated people. The report also suggests that the two-dose vaccine was 88% effective in preventing hospitalizations and 91% effective against severe disease.

EV talk

The electric vehicle sector keeps buzzing along as SPAC deals and IPOs help pour fresh money into technology and development. Elon Musk noted that it was quite likely that Tesla (TSLA) will have a plant in India if it is successful in its bid to begin sales with imported vehicles and tariff relief. He also pointed out that import duties in India are the highest in the world by far of any large country, which is inconsistent with the nation’s climate goals for clean energy vehicles to be treated the same as diesel or petrol vehicles. Tesla reports Q2 results after the bell.

Sector watch: Lucid Motors (LCID) shares are set to begin trading on the Nasdaq this morning after the company’s SPAC deal was approved by shareholders. Lucid and Churchill Capital Corp. IV (CCVI), a blank-check company, announced the deal back in February, which led to an investment of about $4.5B in funding to Lucid. “Lucid has further increased its momentum as we gear up to make the first customer deliveries of our Lucid Air lineup of electric sedans later this year,” CEO Peter Rawlinson said in a statement. “We are making significant investments in the long-term growth and innovation of our company, and we will continue to bring to bear world-class technology to positively impact mankind’s transition to sustainable mobility.”

Last week was also busy: Faraday Future Intelligent Electric (FFIE) began trading with a solid gain after a SPAC merger, while upstart Electric Last Mile Solutions (ELMS) landed a bull rating from Wedbush Securities on an intriguing EV moat opportunity. Some of the biggest gainers of the week were GreenPower Motor (GP) +5.1%, XPeng (XPEV) +5.1% and Fisker (FSR) +3.9%. Meanwhile, Full Truck Alliance (YMM) tanked 36.9% to a post-IPO low and Lordstown Motors (RIDE) peeled off 12.4%.

Today’s Economic Calendar

10:00 New Home Sales
10:30 Dallas Fed Manufacturing Survey
1:00 PM Results of $60B, 2-Year Note Auction

Companies reporting earnings today »

What else is happening…

Philip Morris (NYSE:PM) to stop selling cigs in the U.K. within a decade.

ARM (ARMHF) weighs public float if Nvidia (NASDAQ:NVDA) sale falls through.

Business optimism at highs amid supply chain woes, tight labor market.

VTOL aircraft company, Lilium, confident about SPAC deal.

FTC gets more time for amended complaint against Facebook (NASDAQ:FB).

Virgin Galactic (NYSE:SPCE) to launch former CEO into space.

COVID cases rising… Barron’s still touts six travel stocks.

Combining AstraZeneca (NASDAQ:AZN), Pfizer (NYSE:PFE) jabs boosts antibody levels.


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