Before the Open (Aug 16-20)

Good morning. Happy Friday.

The Asian/Pacific suffered stiff losses. Japan, China, Hong Kong, South Korea, and the Philippines all dropped more than 1%. Europe, Africa and the Middle East currently lean down. Denmark and Sweden are up while Poland, Germany, Russia, South Africa, Norway, the Netherlands, Italy ad Austria are down. Futures in the States point towards a slight down open for the cash market.

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VIDEO: Trading Bitcoin Stocks
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The dollar is up. Oil is down; copper is up. Gold is up; silver is down. Bonds are up. Bitcoin is up.

Stories/News from Seeking Alpha…

Party goes on

The mother of all crashes? No bubble at all? While Michael Burry and Cathie Wood keep arguing, investors are starting to size up their portfolios as the record highs keep going. Fed taper concerns and the spread of the Delta variant don’t seem to be able to weigh on sentiment for more than a day, though trading is getting choppier and warnings of a correction are getting louder. Overnight, Dow and S&P futures slipped 0.5%, while contracts linked to the Nasdaq fell back 0.4%.

Things are especially getting eerie without an S&P 500 pullback of at least 5% since last October, though Q2 corporate earnings have been strong and many investors are betting on a continuing economic recovery. While the “buy the dip” crowd may also be becoming a possible force to be reckoned with on Wall Street, some are still flagging caution and say there are “clouds on the horizon.”

Research from Citi: “Our panic/euphoria model remains very elevated and is warning of coming losses. This is the longest period of ebullient readings without a market correction since 1999/2000 and we anticipate that something will give. The Street is too complacent.”

Another alert: “Against a backdrop of thin liquidity as investors take summer vacations, minor stock market corrections are to be expected in a market that is pricing in peak earnings, extended price-to-earnings ratios and elevated economic growth expectations,” added Richard Saperstein, chief investment officer at Treasury Partners.

No sign of abating

The chip shortage hobbling the auto industry is worsening, with several of world’s largest automakers facing renewed shortages of silicon. The problem is being compounded by a wave of COVID cases sweeping across southeast Asia, where many of the semiconductors are made. The new disruptions could eventually factor into prices at the dealership and the used car market, as well as weighing heavily on the recovery plans of the manufacturers.

Ford: One of its plants in Kansas City is pausing production of the popular F-150 pickup truck (F) due to chip-related parts shortages.

General Motors: The company is halting assembly of its all-electric Chevrolet Bolt (GM) as it adds extended downtime at production lines in North America.

Volkswagen: The German owner of brands including Audi and Porsche warned on the potential for another output cut, saying VW’s (OTCPK:VWAGY) chip supply for Q3 would be “very volatile and tight.”

The biggest news: Toyota (TM) is slashing global production in September by 40%, which will affect 14 factories in Japan and overseas plants. The new plans will translate into 540K vehicles next month, down from the 900K it had originally forecast. While Toyota is keeping its previous annual sales and production targets in place for now, shares of the Japanese carmaker fell 4% on Thursday and are down another 3% premarket.

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Retail sector on watch

Kohl’s (KSS) and Macy’s (M) more than shook off a report yesterday that Amazon (AMZN) was planning to open several physical brick and mortar retail locations. Publishing vibrant earnings for Q2, the two department store chains ended the session up 20% and 7%, respectively. The reports also lit up the entire sector, with Nordstrom (JWN), Dillard’s (DDS), Express (EXPR), Abercrombie & Fitch (ANF) and Guess (GES) all marching higher.

According to the WSJ: “Amazon plans to open several large physical retail locations in the U.S. that will operate akin to department stores, a step to help the tech company extend its reach in sales of clothing, household items, electronics and other areas.”

Some of the first stores are expected to be located in Ohio and California. The 30,000 square foot facilities will offer consumer products from top brands, while the company’s growing private-label portfolio may also be featured (previous store formats from Amazon featured books or tech gadgets). It would be an evolution of sorts for Amazon, which disrupted the retail sector as it scaled online, and took market share (and bankrupted) many big-box operators.

What they’re saying: “I’m actually surprised that it’s taken Amazon this long to come out with this announcement,” former Macy’s CEO Terry Lundgren told CNBC. “Amazon does half of the online business in America, but they recognize that the large majority of business still takes place in physical stores and they want their share of that.” He also points that 40% of apparel bought online gets returned, and having brick and mortar shops could change that and be more profitable.

Another day, another crackdown

Shares in China were under pressure again overnight after the country approved a strict data privacy law, triggering fresh concerns over the intensity of Beijing’s recent regulatory onslaught. The Personal Information Protection Law was passed at a meeting in Beijing of the nation’s top legislative body, the Standing Committee of the National People’s Congress. Alibaba (NYSE:BABA) dropped 3% in Hong Kong on the news, while the Hang Seng TECH Index – which includes Tencent (OTCPK:TCEHY) – fell as much as 4.5%.

What’s in the bill? While the full text of the final version hasn’t been released, it’s being aimed at online fraud, information theft and data collection by domestic technology giants. Remember that Beijing is expected to maintain broad access to data despite the sweeping legislation, which will take effect on November 1. Over the past year, China has cracked down heavily on its tech sector in areas including data security and anti-competitive practices, as well as gaming and fintech.

Analysts at Morgan Stanley are worried about the latest developments, issuing a warning about accelerating redemptions in Chinese equity funds. The recent falls for domestic tech groups could worsen if investors pick up the pace of their withdrawals, “causing additional difficulties in recapturing substantial inflows in the short term.”

Crackdowns everywhere: Earlier this week China’s market regulator issued fresh draft rules at stopping unfair competition on the Internet, while DiDi Global (DIDI) plunged yesterday on potential regulations that would ensure the rights of ride-hailing and trucking platform drivers. Separately, healthcare stocks tumbled on Friday after the People’s Daily called for greater regulation of prescriptions filled using online platforms, while liquor makers sold off as well. Local news outlet Caijing reported on a regulatory meeting about policing the industry due to a culture of heavy post-work drinking.

Today’s Economic Calendar
11:00 Fed’s Kaplan: “The Economic Impact of Covid-19 and How the Country Will Move Forward.”
1:00 PM Baker-Hughes Rig Count

Companies reporting earnings today »

What else is happening…

Oil at lowest since May as taper talk adds to demand fears.

Tesla (NASDAQ:TSLA) pulls a humanoid robot out of its hat at AI event.

Facebook (NASDAQ:FB) faces new FTC antitrust complaint after earlier dismissal.

J&J (NYSE:JNJ) CEO plans to cede position to his deputy in 2022.

Coinbase (NASDAQ:COIN) scooping up crypto for its balance sheet.

‘We couldn’t be further away from a bubble’ – Cathie Wood.

Jessica Alba’s Honest Company (HNST) sinks to post-IPO low.

Adobe (NASDAQ:ADBE) buying video-collaboration company Frame.io for $1.3B.

Dr. Anthony Fauci doubts ongoing COVID boosters will be necessary.

Texas Supreme Court to temporarily keep school mask mandates in place.

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Good morning. Happy Thursday.

The Asian/Pacific markets suffered big losses. Japan, China, Hong Kong, South Korea, Taiwan, Indonesia and Singapore are down the most; New Zealand is up. Europe, Africa and the Middle East are currently also down big. The UK, Denmark, Poland, France, Germany, Russia, Greece, South Africa, Finland, Switzerland, Norway, Hungary, the Netherlands, Italy, Austria, Sweden, Saudi Arabia and the Czech Republic are down at least 1%. Futures in the States point towards a big down open for the cash market.

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VIDEO: Trading Bitcoin Stocks
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The dollar is up. Oil and copper are down. Gold is up; silver is down. Bonds are up. Bitcoin is down.

Stories/News from Seeking Alpha…

Taper talk

The recent market decline is picking up some steam, with the majority of Fed officials signaling that the central bank could start dialing back on pandemic stimulus programs. That’s according to minutes from the July meeting of the FOMC, which said a move to pare $80B/month in Treasuries and $40B/month of mortgage securities could happen this year. While there’s still debate regarding the timing and pace, officials said tapering would not necessarily mean an imminent rate increase.

Movement: U.S. stock futures slid another 1% overnight on the news, after the major averages closed 1% lower on Wednesday. Things don’t look better in Europe, where the Euro Stoxx 50 fell over 2%, or in Asia, where the Hang Seng closed down by the same amount.

“While there is clearly support from some of the more hawkish officials for a relatively quick taper finishing early next year – leaving plenty of scope for rate hikes to potentially begin later in 2022 – the minutes also noted that ‘several’ officials thought that ‘an earlier start to tapering could be accompanied by more gradual reductions in the purchase pace,'” wrote Andrew Hunter, senior U.S. economist at Capital Economics. “On balance, we still expect the run-down to last 9 months which, if it began within the next few months, would point to a mid-2022 end-date.”

Go deeper: Don’t think the focus on the Fed is going to let up anytime soon. While the next meeting of the FOMC will occur on September 21-22, Fed Chair Jay Powell is scheduled to speak at Jackson Hole next week. The annual economic symposium could provide some color on his thinking about tapering, as well as managing the aftermath of the coronavirus pandemic.

Bring out the boosters

Statement from the U.S. Department of Health and Human Services: “We are prepared to offer booster shots for all Americans beginning the week of September 20 and starting 8 months after an individual’s second dose [of a Pfizer (PFE) or Moderna (MRNA) vaccine]… We also anticipate booster shots will likely be needed for people who received the Johnson & Johnson (JNJ) vaccine… We want to emphasize the ongoing urgency of vaccinating the unvaccinated in the U.S. and around the world. Nearly all the cases of severe disease, hospitalization, and death continue to occur among those not yet vaccinated at all.”

Those signed on to the declaration included heads of the CDC and FDA, as well as White House chief medical advisor Dr. Anthony Fauci, U.S. Surgeon General Dr. Vivek Murthy and Assistant Secretary for Health Dr. Rachel Levine.

Data from Israel: 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. Last month, the country’s health ministry became one of the first in the world to formally recommend booster shots for older adults and to those with weak immune systems. On Wednesday, Maccabi Healthcare Services, Israel’s second largest healthcare provider, also released fresh figures that suggested booster shots reduced the risk of infection in the 60-plus age group by 86% and against severe infection by 92%. Of the 105 Israelis who died of COVID in the last week, 103 were either not vaccinated or had not completed the immunization process.

Outlook: “We have this expectation that COVID-19 had a start: It started in Wuhan, China, in December 2019. And we have this expectation that it is going to end,” said Dr. Daniel Landsberger, chief physician of Maccabi Healthcare Services. “We want a date for it to end.” He went on to point out that pandemics are processes, until they run their course or drugs emerge that allow people to live with and manage the disease. “HIV has not ended,” he added, pointing to the No. 1 cause of death among Americans (aged 25 to 44) in the 1990s. “We just don’t call it an epidemic anymore. We relate to it differently.”

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Sizing up Robinhood since IPO

Shares of the popular stock-trading app tumbled more than 7% in AH trading following its first earnings report as a public company. Robinhood Markets (HOOD) reported a net loss of $502M, or a loss of $2.16 per share, though its revenue more than doubled in the second quarter thanks to a big surge in cryptocurrency trading. In fact, some 41% of the broker’s total revenue came from revenue earned from crypto transactions, up from 17% last quarter.

Notable fact: Dogecoin (DOGE-USD) trades accounted for 62% of crypto revenues, as well as 25% of Robinhood’s total net revenue of $565M in Q2.

The reliance on Doge appears in a section of the company’s 10-Q titled “Risks Related to Our Cryptocurrency Products and Services.” It reads: “Business may be adversely affected, and growth in our net revenue earned from cryptocurrency transactions may slow or decline, if the markets for Dogecoin deteriorate or if the price of Dogecoin declines, including as a result of factors such as negative perceptions of Dogecoin or the increased availability of Dogecoin on other cryptocurrency trading platforms.”

Still going: The stock is off nearly 12% in premarket trade to $44/share. Besides the Doge dependency, Robinhood noted that seasonal headwinds and lower trading activity across the industry in Q3 would result in lower revenue and “considerably fewer new funded accounts.” The company also expects to record a one-time charge of $1B in stock-based compensation for restricted stock units related to its IPO. In other highlights for the quarter, monthly active users increased 109% to 21.3M and transaction-based revenue rose 141% Y/Y to $451M, with options activity climbing 48% to $165M, cryptocurrencies at $233M vs. $5M a year earlier, and equities transaction-based revenue down 26% Y/Y to $52M.

Mineral-rich Afghanistan

The VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) has soared 3x as much as the benchmark SPDR S&P 500 Trust ETF (SPY) over a one-year time frame. And now, the fund could see a new catalyst from the Taliban’s takeover of Afghanistan, which is rich in rare-earth metals. REMX aims to track the overall performance of stocks involved in producing, refining and recycling rare-earth and strategic minerals like cobalt, barite, lead, zinc and niobium.

Bigger picture: REMX has already been one of the market’s top ETFs. The fund has a YTD performance of +54%, a one-year return of +137% and has yielded 95% over five years. To put that into perspective, REMX’s performance is nearly triple SPY’s +19% YTD gain and more than triple SPY’s one-year performance of +31%. REMX is also one of the only pure-play ETFs to focus on rare-earth metals. It has $626M assets under management, an expense ratio of 0.59% and has witnessed over $367M of capital inflows YTD.

“It should be an international initiative to make sure that if any country is agreeing to exploit its minerals on behalf of the Taliban, to only do it under strict humanitarian conditions where human rights, and rights for women are preserved in the situation,” said Ahmad Shah Katawazai, a former diplomat at the Afghan Embassy in Washington D.C.

What to watch: Afghanistan is estimated to have $1T to $3T of rare-earths and shares a 57-mile border with China. The latter is widely known as the world’s dominant player in rare-earth metals (owning 35% of global reserves), and only hours after the Taliban overran the Afghan government, said it was ready for “friendly cooperation.” Beijing has also been looking to play a constructive role in Afghanistan’s peace and reconstruction process and previously threatened to cut off rare-earth supplies to the U.S. during the trade war in 2019.

Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
10:00 E-Commerce Retail Sales
10:00 Leading Indicators
10:00 Quarterly Services Report
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening…

Biden administration to require nursing home workers get COVID vaccines.

Exchange operator CME denies report of CBOE $16B acquisition offer.

T-Mobile (NASDAQ:TMUS) breach exposed nearly 50M people’s personal data.

Electric vehicle stocks could benefit if NHTSA re-applies emission fines.

Nvidia (NASDAQ:NVDA) turns higher after earnings; Arm acquisition still moving.

Lowe’s (NYSE:LOW) rallies after topping comparable sales expectations.

Target (NYSE:TGT) CEO: Traffic drove Q2 results, momentum continuing in Q3.

Chipmaker GlobalFoundries is said to file confidentially for IPO.

Bitcoin will be a $100T asset class that everybody needs – Michael Saylor.

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Good morning. Happy Wednesday.

The Asian/Pacific closed mostly up. Japan, China, Hong Kong, South Korea, New Zealand, Taiwan, Indonesia, Singapore, Thailand and the Philippines posted solid or moderate gains. Europe, Africa and the Middle East currently lean up. Denmark, Switzerland, Hungary, Spain, Italy, Portugal, Israel and Austria are up; Poland, France, Turkey and Russia are down. Futures in the States point towards a slight down open for the cash market.

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VIDEO: Trading Bitcoin Stocks
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The dollar is down. Oil is up; copper is down. Gold and silver are up. Bonds are down. Bitcoin is down.

Stories/News from Seeking Alpha…

False start

Over the last 24 hours, the odds of an interest rate hike in New Zealand went from 100%, to 60% and eventually to no increase at all – following the discovery of a single coronavirus case linked to the Delta variant. The 25 bps hike anticipated by analysts would have signaled a milestone of sorts, with New Zealand becoming the first advanced economy in the world to lift rates since the pandemic. All of that came crashing down after a 58-year-old man in Auckland tested positive for COVID, triggering a Level 4 lockdown (can only leave home for essential services) and marking the country’s first case in six months.

Background: New Zealand has implemented a “go hard, go early” strategy under Prime Minister Jacinda Ardern, with tough lockdowns and international borders remaining largely closed. Containment success has helped Ardern secure a second term in office, but her popularity recently took a hit due to a delayed vaccine rollout and rising costs (the country is heavily reliant on an immigrant workforce). Only about 20% of New Zealand’s 5M people have been fully vaccinated, the slowest among OECD nations, leaving it vulnerable to another outbreak.

“Today’s decision was made in the context of the Government’s imposition of Level 4 COVID restrictions on activity across New Zealand,” read a statement from the RBNZ. “The need to reinstate COVID-19 containment measures in some regions highlights the serious health and economic risks posed by the virus… and is a stark example of how unpredictable and disruptive the virus is proving to be.”

Echoing the sentiment? “The COVID pandemic is still casting a shadow on economic activity. It is still very much with us. We can’t, you know, we can’t declare victory yet on that,” Fed Chair Jerome Powell said at a virtual event on Tuesday. “We don’t have a strong sense of how that might work out [with the Delta variant]. So we’ll just be monitoring it.” The commentary reflects just how sensitive monetary policy can be to coronavirus variants or change rapidly given predictions for a more sluggish economic recovery.

Laying cables

Under the sea… Facebook (NASDAQ:FB) and Google (GOOG, GOOGL) are backing two new underwater projects – one in Africa and the other in Asia. The latest collaboration will give the Silicon Valley giants more control of the internet infrastructure that supports their businesses and meet the growing demand for broadband access and 5G wireless connectivity. More than 400 commercially operated submarine cables currently lie on the ocean floor, carrying data as pulses of light within thin optical fibers.

2Africa project: The effort in this region is part of a push to connect the approximately 3.5B people who are still without internet around the world. Facebook’s user growth in developed markets like the U.S. and Europe is also slowing, giving it an advantage in Africa, which has an average mobile internet user rate of around 26% (compared to a world average of 51%). The project’s plan calls for 35 landings across 26 countries, with the goal of building an underwater ring of fiber optic cables around Africa that would begin operating in 2023.

Apricot: Facebook and Google will also participate in a 7,500-mile-long underwater cable system in Asia that would connect Japan, Taiwan, Guam, the Philippines, Indonesia and Singapore. The initiative is scheduled to go live in 2024 and “will deliver much-needed internet capacity, redundancy, and reliability to expand connections in the Asia-Pacific region,” said Facebook engineering manager Nico Roehrich.

Background: Silicon Valley has made a number of recent infrastructure moves into the subsea cable industry. In June, Google announced a new high-speed underwater cable between the U.S. and Argentina, dubbed Firmina, while Facebook and Amazon (AMZN) last week requested approval from the U.S. government for a new undersea data cable between the Philippines and California. In fact, Google now has investments in 18 subsea cables, with global investments in the underwater projects forecast to exceed $2B a year for the next several years.

It’s a big business: Telecom operators own many of these cables, charging fees to companies that use them to transfer data. “If you build your own cable, and you own your capacity, you don’t have to pay anybody,” said Alan Mauldin, an analyst at telecom market research firm TeleGeography. The objective is similar to Amazon’s air cargo fleet, which the e-commerce giant started in 2015 to reduce its transportation costs and reliance on third parties.

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Tapering talk

Stocks slipped on Tuesday following a drop in retail sales, which fell 1.1% in June, driven largely by a slump in car sales. Earnings reports from Home Depot (HD) and Walmart (WMT) didn’t help investing sentiment either amid flattening revenue growth and slowing e-commerce trends. The retail bonanza continues this morning with earnings from Target (TGT), Lowe’s (LOW) and TJX Companies (TJX).

Fed minutes: Not a day goes by that there isn’t some action, with the catalyst today being the Fed’s most recent policy meeting. The minutes may show discussions about tapering monthly bond purchases, or just how divided FOMC officials are on the debate. Yesterday, Fed Chair Jerome Powell said the pandemic is “still casting a shadow on economic activity,” and stock futures wavered around the flatline overnight as investors continued to size up the market.

The bulls: “We remain bullish on stocks (particularly cyclicals/value) thanks to a strong earnings season, signs of receding risk from the Delta variant and normalization of bond-equity correlation,” wrote analysts at J.P. Morgan.

The bears: “The stock market is way overdue for a correction,” said Jim Paulsen, chief investment strategist at Leuthold Group. “COVID cases continue to spike higher darkening economic reopenings, consumer data shockingly has collapsed recently – including consumer confidence last Friday and retail sales and homebuilders’ sentiment. Several stocks have also stopped reacting positively to good earnings, inflation reports remain hot and Federal Reserve taper talk is everywhere.”

Wood vs. Burry

It was only two days ago that Michael Burry, famously known for his role in The Big Short, revealed that he made a big bet against Cathie Wood’s ARK Innovation ETF (ARKK). The fund sits on over $22.5B in assets under management and a five-year return of 467%, but has been under fire recently. Since ARKK peaked back on Feb. 16, the ETF has steadily drifted down 27% and bled away outflows totaling $531.94M over the past three months.

The bet came in a 13F filing, which showed Burry’s Scion Asset Management purchasing 2,355 put contracts on ARKK during the second quarter, representing a bet against 235,500 shares of the ETF. The filing also indicated that Scion held the put position as of at least June 30, though Burry won’t have to report what he did with the stake until next quarter. The put contracts are a bet that ARKK will fall. They’ll rise in value if the ETF’s price drops.

Wood’s response: “To his credit, Michael Burry made a great call based on fundamentals and recognized the calamity brewing in the housing/mortgage market. I do not believe that he understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space.”

From the SA comments section: “After his (Michael Burry) initial prediction on Tesla failed to materialize, Burry tried again in January 2021. Last month, Burry used Twitter to predict another ‘mother of all crashes.’ Burry who? Hollywood? He was correct 2 out of 20, better than his sheep,” writes Legacy Legends. “Gee, it’s too bad that four whole weeks have passed since Burry’s predictions and they have not come to pass,” responds Pompano Frog. “This guy is a genius. He has statistical work that measures the level of speculation going on and its correlation to future market movement. We have been through these cycles many times before.”

Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Housing Starts
10:30 EIA Petroleum Inventories
1:00 PM Results of $17B, 20-Year Bond Auction
2:00 PM FOMC Minutes

Companies reporting earnings today »

What else is happening…

TSA extends mask mandate for U.S. transportation to mid-January.

Black swan preparation: Palantir (NYSE:PLTR) buys $50M in gold bars.

Walmart’s (NYSE:WMT) powerhouse quarter fails to move the stock.

Home Depot (NYSE:HD) slips after comparable sales miss in Q2.

Tilray (NASDAQ:TLRY) scoops up MedMen debt, betting on U.S. legalization.

PG&E (NYSE:PCG) warns of preemptive power shutoff for wildfire season.

Texas Governor Greg Abbott tests positive for coronavirus.

Delta variant is linked to higher risk of hospitalizations – WHO.

Upcoming Apple (NASDAQ:AAPL) event ramps up new iPhone speculation.

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Good morning. Happy Tuesday.

The Asian/Pacific posted some big moves. Malaysia, Thailand and the Philippines did great, but China, Hong Kong, South Korea, Taiwan, Australia and Singapore were very weak. Europe, Africa and the Middle East currently lean up. Denmark, the UAE, Russia, Greece, Hungary and Saudi Arabia are up; France, Spain and Italy are weak. Futures in the States point towards a moderate gap down open for the cash market.

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VIDEO: Trading Bitcoin Stocks
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The dollar is up. Oil and copper are down. Gold is flat; silver is down. Bonds are up. Bitcoin is up.

Stories/News from Seeking Alpha…

Boosters are coming

The Biden administration is set to announce as early as this week its policy regarding the need for COVID-19 booster shots for most Americans, according to the NYT. The plan is to offer a third jab, eight months after a second shot, which could happen as early as mid-to-late September. Boosters would initially be made available to nursing home residents and health care workers followed by older people who were at the front of the line when vaccinations started late last year.

Another jab: With the new policy, the administration intends to let the recipients of Pfizer-BioNTech (PFE, BNTX) and Moderna (MRNA) vaccines know that they need further protection given rising coronavirus case counts across the nation. The officials expect that those who received the single-dose vaccine from Johnson & Johnson (JNJ) will also need an additional dose, but they are awaiting the results from a clinical study for the vaccine, which is anticipated later this month. The new policy is subject to the FDA authorization of additional COVID-19 shots for fully vaccinated individuals.

Pfizer has already submitted early-stage data to the FDA to support the evaluation for a booster of its COVID-19 vaccine. According to the drugmaker’s findings, a third dose elicited significantly higher neutralizing antibodies against the initial SARS-CoV-2 virus compared to the levels observed after the two-dose primary series, as well as against the Beta variant and the highly infectious Delta variant. Moderna has said it plans to ask regulators next month to authorize its related booster shots.

Outlook: The FDA last week already approved the use of booster COVID-19 vaccines for people with compromised immune systems, who are likely to have weaker protection from the two-dose regimens. Meanwhile, the number of people dying with COVID-19 in American hospitals is hitting previous highs in some hotspot areas like Florida, Louisiana, Hawaii, Oregon and Mississippi. Many states are also looking to reinstate public health restrictions as the Delta variant strains hospital systems across the U.S.

Big day for retail

Time for some profit taking? Stock futures slipped 0.5% overnight after the S&P 500 notched a fresh milestone during its fifth consecutive positive session. The benchmark index has now doubled from a closing low hit on March 23, 2020, when many were dumping stocks due to pandemic uncertainty. The 100% surge marks the fastest bull market doubling since World War II, though investors have since rotated between different sectors they estimate will benefit most from the economic recovery.

Quote: “Usually it takes many years to double, so this is another way of showing just how incredible this bull market has been,” said Ryan Detrick, chief market strategist at LPL Financial.

However, a possible end to the Federal Reserve’s asset purchase program could dent some sentiment as Boston Fed President Eric Rosengren announced expectations for the central bank to begin tapering this fall. He argued that the pace of reduction should be relatively brisk, outlining there was “no reason to drag it out,” while asset purchases would come to a complete end in mid-2022. Rosengren’s timeline fits a growing consensus among Fed officials, though the FOMC had not formally discussed a timetable for the proposed tapering process.

Retail on watch: Retail sales data will be released by the Census Bureau at 8:30 a.m. ET, with forecasts for a July slowdown as the Delta variant spread nationwide. Economists see a sales decline of 0.3% last month, after June’s surprise 0.6% increase, though some at Bank of America see an even stronger deterioration of 2.3%. Several big retailers are also set to report earnings this morning, including Walmart (WMT) and Home Depot (HD).

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Regulatory assault

Another day, another crackdown. China’s market regulator is at it again, issuing fresh draft rules at stopping unfair competition on the internet. They cover a wide range of prohibitions, including the way firms can use data and stamping out fake product reviews. The State Administration for Market Regulation could also hire third-party institutions to audit data if an operator falls foul of the guidelines.

Bigger picture: Public opinion on the new rules will be sought until Sept. 15 as the regulator continues a far-reaching onslaught against the country’s technology sector. Beijing has already targeted the internet platform economy, for-profit tutoring, music licensing, financial payments and could soon take aim at online gaming. Chinese internet giants like Alibaba (NYSE:BABA) and Tencent (OTCPK:TCEHY) sold off on the latest developments, while the Shanghai Composite Index ended the day down 2%.

Meanwhile, SEC Chairman Gary Gensler issued his most direct warning yet about investing in Chinese companies, reiterating a call for more disclosures of risks. “When American investors think we’re investing in a Chinese company, it’s much more likely that we’re actually investing in a company in the Cayman Islands,” he said in a video message. “In certain sectors like technology and the internet, the government of China actually doesn’t allow ownership and investment from people outside of China. To get around this, China-based operating companies establish contracts with shell companies in other countries.”

Go deeper: Gensler is asking SEC staff to take “a pause, for now” in approving IPOs of shell companies that Chinese firms use to list shares in the U.S. He also wants investors to have more information about how those firms are structured and what money is flowing between the Cayman Islands and China. “That means disclosing the political and regulatory risk that the government of China could, as they’ve done a number of times recently, significantly change the rules in the middle of the game.”

Autopilot under investigation

Tesla (NASDAQ:TSLA) shares dropped 4.3% on Monday, and fell another 2% premarket, after U.S. auto safety regulators opened a formal safety probe into the carmaker’s driver assistance system. The National Highway Traffic Safety Administration pointed to 11 crashes since 2018 in which Teslas on Autopilot or Traffic Aware Cruise Control were responsible for at least 17 injuries and even one death. The investigation covers 765,000 vehicles, including Models Y, X, S and 3 built between 2014 and 2021.

“Most incidents took place after dark and the crash scenes encountered included scene control measures such as first responder vehicle lights, flares, an illuminated arrow board, and road cones,” according to the report. “The involved subject vehicles were all confirmed to have been engaged in either Autopilot or Traffic Aware Cruise Control during the approach to the crashes.”

What is Autopilot? The limited self-driving feature enables vehicles to steer, accelerate and brake automatically within a lane. “Current Autopilot features require active driver supervision and do not make the vehicle autonomous,” per Tesla’s website. The EV maker is separately developing full self-driving capabilities, which is now available to some users in a beta version.

Mark your calendar: The investigation by the NHTSA comes just days before the highly anticipated “Tesla AI Day.” Elon Musk is expected to emphasize the progress of the company’s artificial intelligence systems, with an eye on recruiting more experts in the field. He’ll also likely pitch the case that investors should think of Tesla as a AI robotics player with new revenue stream potential.

Today’s Economic Calendar
8:30 Retail Sales
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 Business Inventories
10:00 NAHB Housing Market Index
1:30 PM Jerome Powell Speech
3:45 PM Fed’s Kashkari Speech

Companies reporting earnings today »

What else is happening…

The Big Short icon Michael Burry is betting against Cathie Wood’s ARKK.

OPEC+ sees no need to release more oil into the market – Reuters.

T-Mobile (NASDAQ:TMUS) probing alleged data breach affecting 100M people.

13F: Appaloosa, Third Point, Melvin, Berkshire and Greenlight Capital.

Next ViacomCBS (NASDAQ:VIAC) asset sale: ‘Black Rock’ HQ for $760M.

New York to impose vaccine mandates for all health care workers.

6,000 lawsuits over 3M (MMM) surgical warming device revived by court.

Natural gas price rebounds on strong global demand, weather outlook.

U.S. government to appeal court ruling blocking pause on oil and gas leasing.

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

The Asian/Pacific were mostly weak. Japan, Hong Kong, South Korea and Taiwan dropped more than 1%; the Philippines did well. Europe, Africa and the Middle East are currently mostly down. Turkey and the UAE are up, but the UK, France, Germany, South Africa, Finland, Switzerland, Norway, Spain, the Netherlands, Austria and Sweden are down. Futures in the States point towards a moderate gap down open for the cash market.

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My interview with WorldClassPerformer.com
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The dollar is up. Oil and copper are down. Gold is up; silver is down. Bonds are up. Bitcoin is up.

Stories/News from Seeking Alpha…

Plan for Afghanistan

Taliban fighters have taken over the presidential palace in Kabul after a stunning blitz across Afghanistan that saw them seize most of the country in just over a week. Afghan President Ashraf Ghani has also fled abroad, leaving the government in collapse, while demoralized Afghan security forces offered no resistance. The lightning sweep comes after the U.S. spent nearly 2,500 American lives (and some 150,000 Afghan lives) trying to ensure the territory would not become a terrorist haven, while attempting to refashion the nation into a pro-Western democracy.

Backdrop: Towards the end of his presidency, former President Donald Trump announced that U.S. troops would leave Afghanistan by 2021 provided the Taliban met the terms of a peace accord signed the previous year. President Biden went along with the plan, announcing in April that all U.S. forces would leave Afghanistan by Sept. 11, but the news prompted the Taliban to launch an offensive to regain much of the country. That month, the group took control of 73 districts of 421 nationwide, and by August, insurgents controlled 222, and conquered the largest cities and strongholds over the past week.

Quote: “We’ve seen that force [Afghan military] has been unable to defend the country, and that has happened more quickly than we anticipated,” Secretary of State Antony Blinken told CNN’s State of the Union. “This is manifestly not Saigon,” he added. “We went to Afghanistan 20 years ago with one mission, and that mission was to deal with the folks who attacked us on 9/11. And we succeeded in that mission.”

What the markets are feeling: Military conflict or attacks generally don’t have much impact on stocks, and even if they do, the sentiment is usually short-lived. That’s especially the case here, where the war lasted two decades and the pullout was highly publicized. If anything, some are looking at the economic impacts of the long-running conflict, which has cost the U.S. taxpayer an estimated $2.26T.

What to watch next: The U.S. has begun moving personnel from its embassy compound in Afghanistan to the airport in Kabul, where the American “core diplomatic presence” will now be headquartered. Ahead of the departure, the State Department instructed staff at the embassy to eliminate sensitive material, with officials racing to destroy military equipment and hard drives containing classified information. United Airlines (NASDAQ:UAL) has also started rerouting its India flights to avoid Afghanistan airspace, while Emirates has suspended Kabul flights. While many are weighing in over whether America’s longest war was worth it – as well as the pace of the withdrawal or future threats – that debate will continue for some time and may be one for the history books.

Next stop?

Equities have continued to churn higher through thin summer trading, supported by bumper results from the second-quarter earnings season. The major averages notched further record highs last week, before taking a day off this morning. At the time of writing, stock index futures are down 0.3%, though some were quick to point to a bit of nervousness being felt in the air.

COVID conditions: The highly infectious Delta variant is taking a toll on the economic recovery in China, where fresh data on industrial, consumer and investment activity all missed forecasts. That likely means the world’s second-largest economy continued to lose steam in August and the trend is only likely to worsen given the recent tightening in coronavirus restrictions there.

“Asia’s low vaccination rates and low tolerance for community spread suggest it is the region most at risk economically from Delta,” pointed out JPMorgan economist Bruce Kasman, but others are more concerned about the impacts or fallout that could be felt on business activity elsewhere.

On the economic calendar: While no major releases are due out today, investors are preparing for some big data points later in the week. Monthly retail sales data for June will be announced tomorrow, Fed minutes will be released on Wednesday and Philly Fed on Thursday. It’s also a big week for retail earnings, with Q2 reports set to be published by Walmart (WMT), Target (TGT), Lowe’s (LOW) and Macy’s (M).

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No vax, no service

Starting today, New York City will impose a vaccination requirement on dining, fitness clubs and performances held indoors, making it the first major U.S. city to implement such restrictions. Employees of those venues will also be required to be vaccinated, and following a grace period of a few weeks, enforcement will begin on Sept. 13. The policy is gaining traction, with San Francisco instituting its own vaccination requirement for indoor activities that will go into effect on Aug. 20 (Los Angeles is mulling a similar plan).

Bigger picture: The developments could spell trouble for an industry that has been one of the hardest hit by a national labor shortage. The U.S. unemployment rate for restaurants was 8.4% in July, according to the Bureau of Labor Statistics, and many eateries have been turning to pay hikes and retention bonuses to attract new workers. However, some feel that restaurant operators could see some benefits from the vaccine mandate, like less workers that call out sick or stemming the rise in new COVID cases.

“I just don’t think that we’re gonna be the vaccination police,” said Mary Josephine Generoso, manager at Pasticceria Rocco’s of Bay Ridge. “That should be up to the mayor’s office, it’s up to the health department to figure out, but it certainly shouldn’t be the burden of store owners, bars and gyms to be regulating that.” Medical or religious exemptions could also present difficulties in implementing the mandate, as well as tourists, whose foreign vaccine barcodes or documents aren’t recognized in the U.S.

On the corporate side: As safety restrictions and vaccine mandates evolve, Booking Holdings’ (NASDAQ:BKNG) OpenTable has rolled out a feature that allows restaurants to display COVID-19 vaccine requirements to diners. The reservation service additionally plans to launch a national list, updated in real-time, of restaurants that are currently requiring proof of vaccination.

Market cap milestone

Bitcoin (BTC-USD) continues to build on its recent momentum as crypto bulls return to the driver’s seat. In fact, the total market value of cryptocurrencies rose above $2T over the weekend following a heavy selloff in June and July. At one point, Bitcoin even dropped below $30K – following a record high of over $64K in April – and on Sunday it once again topped the $48K level.

Snapshot: Bitcoin could “definitely look to go back to all-time highs,” said Vijay Ayyar, head of business development at cryptocurrency exchange Luno, though he doesn’t expect it to “run through in one shot.” As Bitcoin climbs higher, other cryptos are advancing as well. Cardano (ADA-USD), the third-ranked cryptocurrency after Bitcoin and Ether (ETH-USD) climbed 47% over the past week, while Ripple (XRP-USD) and Dogecoin (DOGE-USD) are up 61% and 18% over the same period, respectively.

Crypto headwinds were seen over the summer due to headlines about Bitcoin’s energy usage and a mining crackdown by regulators in China. The U.S. Senate also passed a massive infrastructure bill last week without any of the proposed amendments on crypto tax reporting that had delayed its passage. While the extensive supervision could be seen as a blow to the crypto community, others said it meant the government is getting serious about the burgeoning industry.

Research note: “The price of Bitcoin was surprisingly resilient in the wake of the news,” wrote NYDIG Global Head of Research Greg Cipolaro “We interpreted this price action as extremely bullish,” and “we think the recognition of the crypto industry by lawmakers was ultimately a legitimizing event, one that should give investors comfort that this industry is here to stay.”

Today’s Economic Calendar
8:30 Empire State Mfg Survey
4:00 PM Treasury International Capital

Companies reporting earnings today »

What else is happening…

Hyatt (NYSE:H) to buy resorts operator Apple Leisure Group for $2.7B.

Texas Supreme Court temporarily halts local mask mandates.

FDA authorizes COVID-19 vaccine boosters for the immunocompromised.

Disney (NYSE:DIS) vs. Netflix (NASDAQ:NFLX): Recounting the quarter in streaming.

Walmart (NYSE:WMT) hires director to enhance cryptocurrency strategy.

Tesla (NASDAQ:TSLA) hopes to begin production at Berlin Gigafactory in October.

Richard Branson off loads Virgin Galactic (NYSE:SPCE) stake worth $300M.

Woodside (OTCPK:WOPEF) in talks to buy all BHP oil, gas assets – report.

Sleeper stock plays in the exploding sports betting sector.

Lamborghini CEO unveils new Countach, lineup hybridized by 2024.

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