Good morning. Happy Friday.
The Asian/Pacific markets closed mixed. China, India, Taiwan and Thailand did well; Japan, Indonesia, Singapore and the Philippines were weak. Europe, Africa and the Middle East are currently little changed. South Africa is up; Denmark, Poland, Spain and Portugal are down. Futures in the States point towards a positive open for the cash market.
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VIDEO Book Review: The Mental Game of Trading
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up. Bitcoin is up.
Stories/News from Seeking Alpha…
Powell takes the stage
We’ve been hearing about it all week, but the moment has finally arrived. All eyes will be on Fed Chair Jerome Powell this morning as he speaks at the central bank’s annual economic symposium in Jackson Hole. Actually, he won’t be taking the podium in Wyoming, but will rather be dialing in for the second year in a row as the rapidly spreading Delta variant takes hold across the U.S.
What to watch: While traders will be analyzing his every word for the future direction of U.S. monetary policy, analysts at RBC said there is “skepticism that the Fed will provide more specific information around a timetable.” There still might be some commentary on tapering, interest rates, inflation and the economic outlook, but you may want to think twice before making any rash trades. As mentioned by Eddie van der Walt at Bloomberg, “an investor who closed an S&P 500 position on the day before every Fed decision and jobs report, then reopened it the next day, would have seen a 29% underperformance since 2015 compared to if they had done nothing.”
Stock index futures overnight were up 0.3% after falling back yesterday amid remarks from the U.S. Federal Reserve’s hawkish wing. Dallas President Robert Kaplan said he believes the economic recovery warrants tapering to commence in October, St. Louis’s James Bullard called for a start in the fall, while Kansas City’s Esther George said a move should be made sometime this year (none of them vote on policy in 2021).
Go deeper: A divergence of opinions among FOMC members was already seen in minutes from the Fed’s July meeting, with “most” officials preparing to reduce the $120B in monthly asset purchases this year, though “several” thought the move should wait until 2022. For his part, Powell has said the central bank is “a ways off” from meeting the threshold for tapering. There also might be some other subjects to focus on in Jackson Hole, given this year’s topic: “Macroeconomic Policy in an Uneven Economy.” In a note last week, HSBC’s Steven Major argued that a discussion of income inequality could potentially have an effect on bond yields, saying “economic inequality is one of the longer-run structural drivers that has contributed to rates being so low.”
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Power broker
Tesla (TSLA) wants to sell electricity directly to customers in Texas, according to an application filed this month with the Public Utility Commission. While there aren’t many details in the filing, it would create a new subsidiary of Tesla, called Tesla Energy Ventures. The new initiative would follow Tesla’s recently reported move to build two giant mega-batteries in Texas, one at its factory under construction near Austin, and the other outside Houston.
Flashback: Many remember the cold snap which seized Texas earlier this year, stranding millions of residents without power or water for days. During the blackout crisis, Tesla CEO Elon Musk trolled ERCOT (Electric Reliability Council of Texas) on Twitter, saying the group was “not earning that R.” Some electricity suppliers have left the market since then, while thirteen new ones have applied to sell power in Texas.
Under the plan, kilowatts could be sold that are either drawn from the grid or pulled from Tesla-made home batteries, while Tesla could let individual Texans with solar panels earn money by sharing their excess power with the grid. Federal energy data shows that Texans have installed more than 1 gigawatt of personal solar panels to date, and the state is the only one in the union with a power grid that doesn’t share energy with neighboring states.
Fine print? At the helm of Tesla Energy Ventures is Ana Stewart, the company’s director of regulatory credit trading. According to the recent application, Stewart has helped Tesla net over $3.8B from regulatory credits since 2017, and the new move could increase the company’s margins. For example, in the second quarter of 2020, green credit sales were greater than Tesla’s free cash flow and totaled more than four times the EV maker’s $104M quarterly net profit.
Eviction friction
Ending protections for millions of Americans who have fallen behind on their rent, the U.S. Supreme Court has dissolved the pandemic-related federal moratorium on residential evictions in a 6-3 vote (it was set to run until Oct. 3). A coalition of landlords and real estate associations brought the case against the Biden administration, which had acknowledged that the legal odds of the ban were on shaky ground earlier this month, but said it was worth pursuing as it would allow more time to distribute more than $45B in rental assistance. Disappointed by the latest Supreme Court decision, the White House urged states, local governments, landlords and cabinet agencies to “urgently act” to help stop evictions.
Quote: “It would be one thing if Congress had specifically authorized the action that the CDC has taken. But that has not happened,” the court said in an unsigned opinion. “It strains credulity to believe that this statute grants the CDC the sweeping authority that it asserts. If a federally imposed eviction moratorium is to continue, Congress must specifically authorize it.”
The eviction moratorium was put in place under the Trump administration during the onset of the pandemic and aimed to shield tenants who missed monthly rent payments from being forced out of their homes (they still owe back rent). It was originally set to expire on Dec. 31, 2020, but Congress stretched the order until late January, and it was then extended several more times under the Biden administration. While the moratorium has protected tenants nationwide, it has also resulted in financial hardships for landlords. Property owners, which say they are losing $13B a month in unpaid rent, are still liable for taxes, insurance and maintenance costs tied to their real estate.
Homebuying is also expensive: Housing prices have only continued to escalate in 2021, driven by historically low interest rates, savings accumulated during lockdowns and a desire for more space as people work from home. That has triggered increased demand, while supply has lagged due to material prices and labor shortages. In fact, the price of the typical U.S. home rose 13.2% over the past year, per Zillow, marking a record rise since the firm started collecting data in 1996. More supply may help put a lid on a prolonged period of price growth, which if left alone might eventually turn into an unsustainable boom that could push activity into reverse.
Blowout payout
Tim Cook just received the tenth and final tranche of a pay deal he received after taking the top job at Apple (NASDAQ:AAPL) a decade ago. The award consisted of 5M shares worth a total of $750M, giving the 60-year-old a net worth of over $2B. According to an SEC filing, Cook already sold most of the new stock from the compensation package, which required AAPL’s return over the past three years to surpass at least two-thirds of companies in the S&P 500.
By the numbers: In the third fiscal quarter of 2011, when Cook took over the late Steve Jobs, Apple reported $28.6B in revenue. Compare that to the most recent quarter, where sales were $81.4B, nearly three times as much. The iPhone-maker’s shares have also returned more than 1,100% on his watch, while Cook has found new revenue streams, such as Apple’s services business, which went from $3B in sales during fiscal 2011 to $53.8B in fiscal 2020. Apple is happy with Cook and his performance, and last September, the board granted another award that could give him more than 1M Apple shares through 2026.
Over the years, Cook has bolstered Apple’s iPhone business and even released several new products, including the Apple Watch and AirPods. He has also made some major acquisitions like Beats and Intel’s cellular-modem unit, as well as doubling down on the company’s services business, such as subscriptions to iCloud, Apple Music, Apple News+ and Apple TV+. The catch-all category attracts new customers and entrenches current users in the Apple ecosystem.
Outlook: Cook has turned Apple into the most valuable publicly traded company in the world, continuing in the innovative ways of co-founder and tech leader Steve Jobs. While the latter’s spirit still guides Cook, one of the recipes for his success may be building his own brand. “I really want [Jobs’] legacy to be with Apple 10 years from now, a hundred years from now, a thousand years from now,” Cook said back in 2016. “Not for Apple to be constrained by it. We’re not thinking, ‘What would Steve do?’ We’re not thinking that. But we’re very much married to his vision of making the best products.”
Today’s Economic Calendar
Jackson Hole Economic Symposium
8:30 International Trade in Goods (Advance)
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
8:30 Personal Income and Outlays
10:00 Consumer Sentiment
10:00 Jerome Powell Speech
1:00 PM Baker-Hughes Rig Count
What else is happening…
New Apple (NASDAQ:AAPL) partner program cuts ‘app tax’ in half for publishers.
Peloton (NASDAQ:PTON) spins lower after rare profit miss, predicts slowing growth.
About-face on China: Cathie Wood scoops up shares of JD.com and Tencent.
Axel Springer to buy Politico in reported billion-dollar deal.
Ford (F) cuts F-150 pickup production because of chip shortage.
Fading rally? Bitcoin (BTC-USD) retreats further from $50K.
Alphabet’s (NASDAQ:GOOGL) Wing surpassing 100K customer drone deliveries.
Microsoft (NASDAQ:MSFT) hires top executive from cloud rival Amazon (NASDAQ:AMZN).
Meme stock watch: Support.com (NASDAQ:SPRT) up 100% over two sessions.
Big banks shift focus from software sector to momentum-heavy media.
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Good morning. Happy Thursday.
The Asian/Pacific markets closed mostly down. Malaysia did well, but China, Hong Kong, South Korea, New Zealand, Australia and Indonesia were weak. Europe, Africa and the Middle East are currently mostly down. Turkey is up, but Germany, Russia, South Africa, Hungary, Spain, the Netherlands, Italy, Portugal, Austria and the Czech Republic are down moderately. Futures in the States point towards a down open for the cash market.
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VIDEO Book Review: The Mental Game of Trading
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The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are down. Bitcoin is down.
Stories/News from Seeking Alpha…
Pausing for breath
Stocks notched another round of fresh highs on Wednesday, before taking a breather in the overnight session. Meanwhile, U.S. equity futures are staying close to the flatline this morning as the highly anticipated Fed economic symposium kicks off in Jackson Hole. Central bankers could provide some clarity on the latest monetary policy at the event, with Fed Chair Jerome Powell slated to make remarks on Friday.
Quote: “It is one of the seminal moments each year where everybody is watching,” said Mark Spindel, chief investment officer at Potomac River Capital. “There are no immaculate tightenings and now that they’ve admitted they are talking about tapering, they should refine that talk and give us some insight on what they are going to do.” Other discussions may surround the “transitory” effects of inflation, the timetable of interest rates, as well as what impact Delta or other future variants will have on monetary policy.
Interestingly enough, the annual conference was supposed to take place physically in Jackson Hole this year, before the Kansas City Fed’s abrupt decision last week to move the gathering online. That’ll make it a solely virtual affair for the second year in a row. The dramatic U-turn highlights a delicate balancing act for the Fed as it charts its way out of a period of extraordinary monetary support.
On today’s economic calendar: The second reading of U.S. gross domestic product for Q2, measuring the country’s economic growth, will be published at 8:30 a.m. ET. The latest jobless claims filed during the week ended August 21 will be released at the same time. Treasury yields are also holding steady before the latest auctions on $30B worth of 4-week bills, $30B of 8-week bills and $62B of 7-year notes.
Hut, Hut, Hike!
New Zealand had been set to become the first developed country in the world to raise rates in the pandemic era (until one COVID-19 case grounded its decision), but that title has now gone to South Korea. The Asian nation raised its policy rate for the first time in almost three years on Thursday with a quarter-percentage-point hike to 0.75%. The Bank of Korea also pushed up its inflation projection to 2.1% from 1.8% previously, while the benchmark KOSPI stock index closed down 0.6% for the session.
Bigger picture: Raising rates is a calculated risk for South Korea’s export-driven economy, which has strongly rebounded from last year’s pandemic slump. The thought here is to start paring back on stimulus before debt bingeing prompts bigger problems like asset bubbles or new threats to the economy. “We’ve decided to put the focus on reducing financial imbalances, and as we raise the rate, we are embarking on a process of normalizing policy in line with the recovery,” the BOK wrote in a statement.
Central banks across the globe are also laying the groundwork for transitioning away from crisis-era stimulus. The move by South Korea could give central bankers and market participants some food for thought before the Fed’s annual symposium in Jackson Hole. Chair Jerome Powell delivers his keynote address tomorrow and is expected to signal the future direction of U.S. monetary policy.
Next steps for South Korea: “We won’t be doing things in a hurry, but we also won’t hold off,” BOK Governor Lee Ju-yeol said at a news conference. “As for timing for the further hikes, we will consider how the COVID-19 situation plays out, and changes in the Fed’s policy stance, which would have an important impact for us, as well as how the financial imbalances play out.”
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Unvaccinated premiums
Vaccine mandates are spreading across the U.S., especially after the FDA issued full approval of a jab from Pfizer-BioNTech (PFE, BNTX). The Pentagon on Wednesday even ordered military troops to begin vaccinating immediately and the measures against the unvaccinated are expanding even in the corporate sphere. While some firms have been strict in their requirements, others have taken a lighter tone, like denying fitness rooms, free coffee or other perks.
Levies are coming: As the more infectious Delta variant circulates nationwide, the airline known by the same name is taking a more punitive approach toward getting its staff inoculated. Starting Nov. 1, Delta Air Lines (DAL) will raise health insurance premiums for unvaccinated employees by $200 a month, in a move that is reminiscent of what some companies already do for smokers. Delta says the surcharges are to cover higher COVID costs, with the average hospital stay due to the virus costing the carrier $50,000 per person.
CEO Ed Bastian also noted that vaccine holdouts represented 100% of hospitalizations. Delta’s unvaccinated employees will face other restrictions as well, including indoor masking effective immediately and weekly COVID tests starting Sept. 12. Earlier this year, Delta stopped short of instituting an outright vaccine mandate, requiring only new employees to provide evidence of a jab, unlike rival United Airlines (UAL).
By the numbers: 75% of Delta’s workforce is already vaccinated against the coronavirus, so it will be interesting to see if the policy has any effect on the 25%, or about 17,000 workers. A $200 drawdown per paycheck a month would result in an annual cost of $2,400 for that employee.
Grab the chips
Shares of Western Digital (WDC) surged almost 8% on Wednesday following a report that the data-storage technology leader is close to merging with Japan’s Kioxia Holdings in a deal that could be worth more than $20B. “People familiar with the matter” said that talks between the companies have heated up recently, according to the WSJ, and a deal could be finalized by the middle of September. Western Digital would finance the deal with its stock, while CEO David Goeckeler would stay on as boss of the combined business.
Snapshot: Kioxia is owned by private-equity firm Bain Capital. While the company’s name might not be as well-known outside of Japan, it was once called Toshiba Memory and has a long track record in the semiconductor industry.
Western Digital’s acquisition of Kioxia would be good for a commodity industry like NAND memory, according to Wedbush analyst Matthew Bryson, though there is no guarantee a deal of this size would get approved by all the necessary governmental regulators. “The combined entity would be about the same size as Samsung, and questions abound whether Japan will allow a foreign entity to purchase Kioxia.”
Consolidation: The deal could further shake up the global chip industry, which has been hit by supply shocks from the pandemic and red hot demand for new smartphones, 5G expansions and a rise in work-from-home culture. Over the past few years, there’s been a number of big M&A deals in the industry, including Analog Devices’ (ADI) $20B purchase of Maxim Integrated Products, AMD’s (NASDAQ:AMD) $35B acquisition of Xilinx (XLNX) and Nvidia’s (NVDA) $40B buyout of Arm Holdings (ARMHF). Intel (NASDAQ:INTC) recently also made clear that it’s interested in M&A and has explored purchasing GlobalFoundries.
Today’s Economic Calendar
Jackson Hole Economic Symposium
8:30 GDP Q2
8:30 Initial Jobless Claims
8:30 Corporate profits
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $62B, 7-Year Note Auction
4:30 PM Fed Balance Sheet
Companies reporting earnings today »
What else is happening…
Sales jump at Salesforce (NYSE:CRM) amid pandemic-fueled cloud demand.
Treasury seeks to accelerate emergency rental assistance distribution.
COVID boosters likely to win regulatory nod for use at six months.
Risk of heart inflammation could be higher after COVID than post vaccination.
Palantir (NYSE:PLTR) glitch gave unauthorized FBI employees access to data – NY Post.
Apple (NASDAQ:AAPL): The tech giant with the $20B ad opportunity.
EV charging player Volta (VLTA) to begin trading today.
Snowflake (NYSE:SNOW) tops estimates, but guides for slower product sales growth.
Will HP (NYSE:HPQ) and Dell (NYSE:DELL) ride the PC wave to strong Q2 results?
White House summit: Microsoft (NASDAQ:MSFT) will spend $20B on cyber security.
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned up. China, New Zealand, Taiwan, Malaysia, Thailand and the Philippines did well. Europe, Africa and the Middle East are currently mixed and little changed. Norway, Spain and the Netherlands are up; Turkey, Switzerland and Hungary are down. Futures in the States point towards a flat open for the cash market.
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VIDEO Book Review: The Mental Game of Trading
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The dollar is up. Oil and copper are up. Gold and silver are down. Bonds are down. Bitcoin is down.
Stories/News from Seeking Alpha…
Someone tell Putin
Following a year that was marred by some high-profile cyberattacks, including the SolarWinds (SWI) and Kaseya breach, Colonial Pipeline hack, and supply disruption at meatpacker JBS (OTCQX:JBSAY), President Biden is calling in the big boys. The CEOs from Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN) are heading to the White House this afternoon to discuss efforts in beefing up cybersecurity. Bloomberg reports that other top industry players were also invited to the meeting, including the heads of Alphabet (GOOGL), IBM (IBM), Southern Co. (SO) and JPMorgan Chase (JPM).
Backdrop: Last month, the White House issued a National Security Memorandum that was meant to help the private sector establish new standards in beefing up their cybersecurity strongholds. Given the order’s primary objective of defending U.S. critical infrastructure, it makes sense that “infrastructure” will be high up on the list of today’s conversation. Reports also suggest that the executives are likely to discuss how software can drive better security in the supply chain.
“What I think is more likely, if we’re going to end up in a war – a real shooting war with a major power – is going to be the consequence of a cyber breach of great consequence, which is increasing exponentially in terms of capabilities,” Biden warned back in July. Cyber stocks are also in focus ahead of today’s security summit.
Statistics: According to Check Point Software’s (CHKP) Mid-Year Security Report, there were 93% more ransomware attacks in the first half of 2021 than in the same period last year. In addition, the attacks were marked by the rise of “Triple Extortion” ransomware, whereby hackers steal data and threaten to release it unless a payment is made, as well as going after the target’s customers or vendors in the same way. IBM estimates data breaches now cost companies $4.24M per incident on average, with costs rising 10% compared to 2020.
Another day, another record
The major averages rose again Tuesday following a broad-based stock rally powered by full approval for Pfizer-BioNTech’s (PFE, BNTX) COVID-19 vaccine. The S&P 500 notched its 50th record close of 2021, while the Nasdaq hit the 15,000 milestone. “Round numbers are always important because it brings the story of the market to the people who don’t watch it everyday,” said Art Hogan, chief market strategist at National Securities Corp., pointing out that the records could add to investing sentiment.
Next up: U.S. equity futures were marginally higher in the overnight session, with traders all pointing to the Fed’s annual economic symposium in Jackson Hole, Wyo, as the next catalyst for the markets. The event will be watched to see whether central bankers will detail their plans for tapering monetary stimulus, with bonds currently being scooped up to the tune of $120B per month.
Analyst commentary… “It is wait-and-see because we’re getting to the point where we think we’ll get some definitive information on tapering,” declared Daniel Morris, chief market strategist at BNP Paribas Asset Management. “On one hand, we’ve had the signaling on tapering, but on the flip side, you see people looking at a deceleration in activity.”
“The Fed may make a taper announcement in September or November, but it will probably be a slow taper with no commitment over interest rate hikes,” added Edward Moya, senior market analyst at OANDA.
“Taper talk is the worry, but if inflation continues to run hot and economic data continues to be mixed the timing of tapering could get pushed,” noted Lindsey Bell, chief investment strategist at Ally Invest. “It’s unlikely that the Fed will force a taper on an economy that isn’t ready, and the outlook is becoming less certain with the rise of the Delta variant.”
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Where did COVID-19 come from?
It’s been 90 days since President Biden ordered a systematic review into the origins of COVID-19. The effort was intended to bring the world “closer to a definitive conclusion” as to what caused the pandemic, which has so far killed at least 4M people across the globe and 630K Americans. Many scientists believe the virus jumped from bats to humans, though a lab leak theory has gained ground in recent months after initially being dismissed by many as a conspiracy.
Flashback: Early on in the pandemic, the Chinese government refused to share much of its data and placed restrictions on an international probe organized by the World Health Organization. Since then, a handful of nations including the U.S. have called for more transparency, like accessing complete original data and samples. Meanwhile, some Chinese officials have even gone as far as to suggest the virus may have originated at a military laboratory called Fort Detrick in Maryland or was imported into the country through frozen food. The whole case smells funny and the U.S. ordered a second-phase investigation after suspecting a cover-up.
One of the biggest challenges facing the investigation into the virus’ origins has been China’s unwillingness to share more data. Without cooperation from Beijing, the probe can only rely on an analysis of early cases exported from China or genetic sequences posted by the Wuhan Institute of Virology on open-source platforms. The campaign is also being run by U.S. intelligence agencies, not a community of scientists.
The results: Reports suggest the classified intelligence record sent to President Biden failed to conclusively determine if the outbreak spilled over from animals or was an accidental lab leak. However, parts of the probe could be declassified in the coming days after members of Congress are briefed on the outcome. “We may never know the true origin of COVID-19,” said Jon Andrus, a professor of global health at George Washington University. “A retrospective analysis is like using the scientific method with one hand tied behind your back.”
Coming soon
Breaking a stalemate within the party, Democrats in the House of Representatives are advancing President Biden’s economic agenda. The chamber passed a $3.5T budget resolution and moved forward a $1T bipartisan infrastructure bill, along with sweeping voting rights legislation. The step will allow Democrats to write and approve a huge “human” infrastructure package without GOP support and puts the Senate-approved “physical” infrastructure plan on track for final passage in the House.
Bigger picture: The 220-212 party-line vote included a non-binding commitment to decide on the infrastructure bill by Sept. 27, which aims to quell nine centrist Democrats who had urged the House to consider the bipartisan bill before taking up the larger budget resolution. House Speaker Nancy Pelosi has meanwhile pushed to pass the bipartisan and Democratic plans at the same time in order to ensure centrists and progressives back both measures.
“The bottom line is, in my view, we are a step closer to truly investing in the American people, positioning our economy for long-term growth and building an America that outcompetes the rest of the world,” President Biden commented after the vote. “My goal is to build an economy from the bottom up and middle out, not just the top down.”
Outlook: Among the priorities Democrats hope to include in the $3.5T legislation are expanding Medicare, universal prekindergarten and two years of paid tuition at public universities. Climate measures are also involved, like pushing utilities to generate 80% of the nation’s electricity from clean sources by the end of the decade. While Republicans have supported the smaller “physical” infrastructure bill, they are not backing the “human” measure, pointing to the price tag – among other things – that could hike taxes, increase inflation and add to the federal deficit.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Durable Goods
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $26B, 2-Year FRN Auction
1:00 PM Fed’s Daly Speech
1:00 PM Results of $61B, 5-Year Note Auction
Companies reporting earnings today »
What else is happening…
GameStop (NYSE:GME) rallies with no clear signs of Reddit fatigue.
Waymo (NASDAQ:GOOGL) opens robotaxi service in San Francisco.
Supply issues: McDonald’s (NYSE:MCD) takes milkshakes off British menus.
Warby Parker surprises by filing for direct listing not IPO.
Goldman Sachs (NYSE:GS) requires employees in offices to get vaccinated.
Pinduoduo (NASDAQ:PDD) soars 22% after pledge to donate profits.
Nordstrom (JWN) falls with sales still below 2019 levels.
Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD) chips in new U.S. supercomputer?
South Korea targets Google (GOOGL), Apple (NASDAQ:AAPL) app store dominance.
Unvaccinated 29X more likely to get hospitalized with COVID-19 – CDC.
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Good morning. Happy Tuesday.
The Asian/Pacific markets did great. Japan, China, Hong Kong, South Korea, Malaysia and the Philippines posted big gains. Europe, Africa and the Middle East are currently mixed. Turkey, Greece, South Africa and Saudi Arabia are up; the UK, Denmark, France, Hungary, Spain and Sweden are down. Futures in the States point towards a small positive open for the cash market.
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VIDEO: Where are We in the Current Market Cycle
VIDEO: An Argument for a Healthy Market
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The dollar is flat. Oil and copper are up. Gold and silver are up. Bonds are down. Bitcoin is flat.
Stories/News from Seeking Alpha…
Full approval
It’s official! The FDA has granted full approval for the COVID-19 vaccine developed by Pfizer (PFE) and BioNTech ((BNTX), sending shares of the two companies up 2.5% and nearly 10% on Monday. Stocks as a whole also got a boost from the latest news, which could encourage more jabs for people who are hesitant to get vaccinated. “Many believe that [the approval] will create that much more momentum in vaccine trends, especially in those states and population groups that are lagging,” said Joe Amato, chief investment officer at Neuberger Berman.
Backdrop: In December, Pfizer’s two-dose regimen became the first COVID-19 shot to receive the emergency use authorization from the FDA. Since then, FDA scientists have evaluated some 340,000 pages of vaccine data – about three times more than Pfizer’s application for emergency use – in less than four months (compared to the eight months it typically takes the agency). In total, the shot has gone from development to full approval in less than 18 months, a fraction of the 10-12 years required on average.
“The FDA’s approval of this vaccine is a milestone as we continue to battle the COVID-19 pandemic,” remarked acting FDA Commissioner Janet Woodcock. “While this and other vaccines have met the FDA’s rigorous, scientific standards for emergency use authorization, as the first FDA-approved COVID-19 vaccine, the public can be very confident that this vaccine meets the high standards for safety, effectiveness, and manufacturing quality the FDA requires of an approved product.”
Go deeper: According to the agency, the Pfizer-BioNTech COVID-19 vaccine will be available on the market as “Comirnaty” for the prevention of COVID-19 in those aged 16 years and above. However, under the emergency use authorization, the mRNA-based shot will continue to be available for those between 12-15 years and as an additional dose for certain people with impaired immune systems. The two-dose vaccine was also found to be 91% effective in preventing COVID-19, slightly lower than the 95% efficacy rate touted in trial data when the jab was authorized late last year.
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Accommodations for refugees
As the Biden administration debates how to evacuate, vet and settle thousands of Afghan refugees, one company is stepping up to the plate to house those trying to escape: Airbnb (NASDAQ:ABNB).
Statement from CEO Brian Chesky: “Starting today, Airbnb will begin housing 20,000 Afghan refugees globally for free. While we will be paying for these stays, we could not do this without the generosity of our Hosts. If you’re willing to host a refugee family, reach out and I’ll connect you with the right people here to make it happen! The displacement and resettlement of Afghan refugees in the US and elsewhere is one of the biggest humanitarian crises of our time. I hope this inspires other business leaders to do the same. There’s no time to waste.”
The commitment did not specify exactly how much the company plans to spend on the undertaking or how long refugees will be housed for, but the U.S. has evacuated roughly 48,000 people from Afghanistan in recent days (10,400 people were flown out on Monday alone). Thousands more are still trying to escape, fearing retaliation from the Taliban militants that are now in power.
Outlook: British Prime Minister Boris Johnson will host an emergency meeting of G7 leaders today to address the chaotic situation in Afghanistan and whether there should be an extension to the proposed American deadline for a complete withdrawal by Aug. 31. While the U.S. does not even know how many more Americans are still in the country, Secretary of State Antony Blinken said he remains committed to the Special Immigrant Visa program and evacuating “translators, interpreters, et cetera.” The SIV program is meant to provide a pathway to the U.S. for Afghans who were employed by or worked on behalf of the government, but applicants that can make it on a flight are now being transited through countries like Qatar and Kuwait to finish the process.
Where are the autonomous cars?
In a new exchange over Twitter, Tesla (NASDAQ:TSLA) CEO Elon Musk called the latest release of his company’s experimental driver-assistance software, FSD Beta 9.2, “actually not great.” FSD Beta is only available to Tesla employees and some drivers who previously purchased Full Self-Driving capability (or FSD), which costs $10,000 or $199 per month in the U.S. The critical tweet came just days after he touted Tesla’s expertise with autonomous systems and related components at an event called Tesla AI Day.
Bigger picture: Last week, U.S. car safety regulators opened a probe into Tesla over a more basic iteration of the company’s driver-assistance technology called Autopilot. The feature uses cameras and other sensors to help with tasks like maintaining a safe distance from other cars on the highway. Full Self-Driving is intended to provide greater functionality, like the ability to automatically steer on city streets, but that has been a promise that is yet to come to fruition.
“Autopilot/AI team is rallying to improve as fast as possible,” Musk continued via Twitter. “We’re trying to have a single stack for both highway & city streets, but it requires massive NN (neural network) retraining. Just drove FSD Beta 9.3 from Pasadena to LAX. Much improved!”
Autonomous car explainer: According to SAE International, formerly named the Society of Automotive Engineers, there are different stages of self-driving capabilities ranging from Level 1 through Level 5. Tesla’s FSD Beta is currently no more than a Level 2, where the car can do the steering and acceleration, but the driver must be ready to take the wheel. Going to Level 3 could take years, as systems make decisions based on changing driving situations around the vehicle, while people inside the car do not need to supervise the technology.
Focus on delivery
Walmart (WMT) is launching a delivery service for other businesses throughout the U.S. as it looks to gain ground on Amazon.com (AMZN). The program, called Walmart GoLocal, will dispatch workers to merchants’ stores to pick up items and then deliver them to shoppers. The new line of business will operate through Walmart’s Spark delivery network and comes as sellers scramble to secure deliveries ahead of the all-important holiday shopping season.
Backdrop: Walmart has spent the past half a decade building out its delivery network. In August 2016, it acquired e-commerce startup Jet.com for $3.3B (which was later discontinued, but helped it propel its delivery efforts). In March 2018, Walmart launched its grocery delivery service, and later in February 2020, it launched Walmart Fulfillment Services. Earlier this year, it trialed its first company-branded “last-mile” delivery vans, with a small, electric fleet operating in areas near Walmart’s Arkansas headquarters.
GoLocal will be a white-label service, meaning deliveries will not be made by Walmart-branded vehicles. Instead, it will rely on a mixture of associates, gig workers, as well as other delivery companies (there are also plans for self-driving vehicles and drones). Shipping will begin by the end of 2021, and will be priced competitively with two-hour or two-day delivery options.
Go deeper: The new service is an important part of the company’s overall strategy, which includes diversifying its revenue streams and profit pools. It has already established a number of contractual agreements with national and enterprise retail clients, and comes weeks after the retailer announced plans to offer technologies and capabilities to help other businesses navigate their own digital transformation.
Today’s Economic Calendar
8:55 Redbook Chain Store Sales
10:00 New Home Sales
10:00 Richmond Fed Mfg.
1:00 PM Results of $60B, 2-Year Note Auction
1:00 PM Money Supply
Companies reporting earnings today »
What else is happening…
Crude oil soars after seven straight days of losses; energy stocks rally.
Riot Blockchain (NASDAQ:RIOT) reports 1,540% revenue increase from crypto mining.
Richard Branson’s Virgin Orbit going public in $3.2B SPAC deal.
China’s DiDi (NYSE:DIDI) suspends plans to expand in Europe.
Hours after approval, COVID vaccine mandates in NYC schools and Pentagon.
Struggling to meet demand: Abbott (NYSE:ABT) destroyed millions of rapid COVID tests.
Target (NYSE:TGT) to add more Disney shops to its stores.
Hedge fund Citadel said to plan $500M redemption from Melvin Capital.
Apple (NASDAQ:AAPL) wearables sales strengthen ahead of Watch Series 7.
SEC is said to give Chinese companies new IPO disclosures.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets posted big gains. Japan, China, Hong Kong, South Korea, New Zeland, Taiwan, Indonesia and Thailand all did great. Europe, Africa and the Middle East are currently doing well too. Poland, France, Turkey, Russia, Greece, South Africa, Norway, Hungary, the Netherlands and Austria are leading. Futures in the States point towards a moderate gap up open for the cash market.
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VIDEO: Where are We in the Current Market Cycle
VIDEO: An Argument for a Healthy Market
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down. Bitcoin is up.
Stories/News from Seeking Alpha…
A new gig
The battle over the gig economy is far from over. Last year, companies like Uber (NYSE:UBER), Lyft (NASDAQ:LYFT), DoorDash (NYSE:DASH), Postmates (POSTM) and Instacart (ICART) sunk $200M into Proposition 22, which exempted them from treating drivers as employees in California. Instead, the app-based businesses promised new protections to workers, such as giving drivers 30 cents a mile driven to account for gas and other vehicle costs, healthcare subsidies for drivers who work 15 hours or more a week and occupational accident insurance coverage while on the job.
Fast forward: While California voters ended up passing the measure with an overwhelming majority, a new ruling from California Superior Court Judge Frank Roesch said treating drivers as independent contractors was unenforceable. The effort broke the state constitution by unfairly limiting the power of the Legislature in regards to workers’ compensation and collective bargaining. He also declared that Proposition 22 hampered the state legislature’s authority and its ability to pass future legislation, which is unconstitutional.
Uber, Lyft and other gig companies don’t need to immediately change their way of doing business, but the ruling complicates their efforts to preserve their independent worker models. It’s also a setback in their years-long fight which culminated in the most expensive ballot measure in the history of California. The companies had hoped to establish a “third type” of employment, in which drivers are treated as contractors but are given more benefits under certain conditions.
Response: “We believe the judge made a serious error by ignoring a century’s worth of case law requiring the courts to guard the voters’ right of initiative,” said Geoff Vetter, a spokesman for the companies’ Proposition 22 campaign. “This outrageous decision is an affront to the overwhelming majority of California voters.” Proponents of the plan are already saying they will appeal the court’s decision and the group is fighting to get a similar measure enacted next year in Massachusetts.
Avoiding the office
A new report from Bloomberg suggests that Apple (AAPL) will become the latest corporation to delay the return of its global workforce to the office (until at least January). Wells Fargo (WFC) and Chevron (CVX) have already postponed their September returns following an uptick in coronavirus cases, while Amazon (AMZN) and Facebook (FB) have pushed their return into early next year. Lyft (LYFT) is only calling employees back to its San Francisco headquarters in February, about two years after it first closed its offices.
Connecting the dots: Employees may now stay at home a lot longer than initially forecast, making it harder or more disruptive for them to return them to the office. New routines have been developed during the pandemic, like swapping commuting for exercise or spending more time with family. Some are even thinking that the return to the office could weigh on productivity or make it harder to attract new employees that are more than happy to work in their pajamas.
“If you have a little blip, people go back to the old way. Well, this ain’t a blip,” said Intel CEO Pat Gelsinger.
Go deeper: Many are touting the future as a “hybrid” work model, where some days are in the office and others are at home, as companies make decisions about their future work environment. Others are sizing up the effects hybrid work will have on the real estate industry, or office REITs in the investing world. “Rent collection has been fairly resilient, even with widespread remote work during the pandemic, due to tenants maintaining ongoing operations and long-term leases with expirations of generally less than 10% per annum over the next few years,” according to Fitch Ratings.
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Policy connection
Stock futures are turning higher, all up by 0.3%, after a week in which the major averages saw some losses. Concerns surfaced over the Fed taking away the stimulus punchbowl, with tapering talk moving toward center stage. Investors will once again be watching monetary policy on Thursday and Friday as the Fed’s annual economic symposium kicks off in Jackson Hole.
Commentary: “I think that Chairman Jerome Powell is going to step lightly as he did after the last minutes were said and say that ‘there is potential, we’re looking further, we’re data-oriented,’ all the sorts of things that come into Fedspeak,” said Nomi Prins, author of Collusion: How Central Bankers Rigged the World. “But in terms of actual taper announcement and a specific timing, I don’t think that this particular Jackson Hole episode is the time or the place, and I think the Fed’s going to be cognizant of this because of the virtual globality of it.”
The FDA this week is also expected to grant its first full approval of a COVID vaccine – from Pfizer-BioNTech (PFE, BNTX). The authorization could encourage more people who are hesitant to get vaccinated, helping spur investing sentiment. The two-dose jab was first cleared by the agency on an emergency use basis in December for people 16 years and older, and is now recommended for anyone over the age of 12.
On today’s economic calendar: The latest figures from the housing market come into focus, with existing home sales data being published this morning (new home sales are reported tomorrow). On the earnings front, JD.com (JD) and Madison Square Garden Entertainment (MSGE) will announce results before the open, while Palo Alto Networks (PANW) will release its Q2 report after the close.
Bitcoin revival
Inching near the $50,000 level all weekend, Bitcoin (BTC-USD) finally climbed above the milestone on Sunday evening as the crypto continues to rebound from its collapse in early May. The upward movement sent the total market value of cryptocurrencies to $2.2T, while crypto trading volume over the last 24 hours reached $109B. Also rallying on the news: Cardano (ADA-USD) +9%; Binance Coin (BNB-USD) +6%; Ethereum (ETH-USD) +3%; Dogecoin (DOGE-USD) +2%.
Catalysts: On Friday, Coinbase said it would add $500M in crypto to its balance sheet and allocate 10% of profits into a crypto assets portfolio. PayPal has announced it will allow people to buy, hold and sell four types of cryptocurrencies – Bitcoin, Ethereum, Litecoin (LTC-USD) and Bitcoin Cash (BCH-USD) – in the U.K. It’s the company’s first international expansion for its crypto offering outside the U.S., where it launched the service in October 2020.
Global crypto adoption has risen some 881% in the past 12 months, according to crypto data firm Chainalysis, which uses factors like peer-to-peer exchange trading volume and value received.
Outlook: While $50K makes for a nice headline, the level to watch might be a bit higher. “The minor breakouts reflect positive short-term momentum and improved intermediate-term momentum following July’s successful test of support near $30K. The next hurdle on the chart is just above $51K,” wrote Katie Stockton, technical strategist at Fairlead Strategies. She also points out that Bitcoin (BTC-USD) has passed other tiers of resistance in recent weeks, including its 50-day and 200-day moving averages.
Over in Afghanistan
American banks are exercising more caution on transactions with Afghan counterparts as they wait for guidance from U.S. officials on whether sanctions on the Taliban will apply across the country now that the Islamist group is in control, WSJ reports. That comes as the two big U.S. money-transfer services – Western Union (WU) and MoneyGram International (MGI) – halted payments into Afghanistan, which consequently serve as an important source of support for many Afghan families.
Other action: The Financial Action Task Force, a global terror-finance watchdog organization, also warned member countries that they must freeze assets of the Taliban given its designation as a terrorist group assigned by the U.S., the United Nations, and other countries. Given that the Taliban has taken control of institutions of the state, markets and key industries, finance officials are expressing concern that the sanctions will apply to a broader range of transactions.
So far, the U.S. Treasury Department hasn’t provided much in the way of guidance to the financial industry, but former Treasury officials told the WSJ that the decision on whether to broaden the application of sanction will hinge, in part, on how the Taliban governs. Withholding public guidance now, they say, gives the U.S. government leverage in its diplomatic efforts by keeping its options open for wider sanctions.
Commercial help: The Biden administration has meanwhile ordered six domestic airlines to contribute 18 total planes to help with the evacuation of Americans and Afghans seeking to leave country after the Taliban takeover, only the third time in 70 years for such a request. American Airlines (AAL), Atlas Air (AAWW), Delta Air Lines (DAL) and the Omni Air unit of Air Transport Services (ATSG) will provide three planes each, while Hawaiian Holdings (HA) will send four and United Airlines (UAL) will pitch in with two jets. The commercial aircraft will not fly in and out of Kabul, but will ferry evacuees to the U.S. from bases in Germany, Qatar and Bahrain to ease transport bottlenecks.
Today’s Economic Calendar
8:30 Chicago Fed National Activity Index
9:45 PMI Composite Flash
10:00 Existing Home Sales
Companies reporting earnings today »
What else is happening…
Three sectors are expected to drive S&P earnings through 2021.
Peloton (NASDAQ:PTON) app code suggests a rowing machine is in the works.
As the crypto concept turns 50, could its market cap rival gold?
Broadcast bounces back in Nielsen TV Gauge, but streaming marches on.
Maddow stays on at MSNBC (NASDAQ:CMCSA) after signing multiyear deal.
Microsoft (NASDAQ:MSFT) boosts business pricing for Office subscription products.
Oil and gas companies continue to hold the line on capex.
Tesla’s (NASDAQ:TSLA) transition to an auto major could include advertising.
Money supply growth may give clues about Bitcoin price path.
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