Before the Open (Oct 18-22)

Good morning. Happy Friday.

The Asian/Pacific markets were mixed and little changed. There were no outstanding winners or losers. Europe, Africa and the Middle East are currently mostly up. The UK, Denmark, France, Turkey, Germany, South Africa, Russia, Finland and Portugal are leading. Futures in the States point towards a flat open for the S&P but a gap down open for the Nasdaq.

————— Masterclass Overview –>> here —————

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

Stories/News from Seeking Alpha…


Shares of Snap (SNAP) tumbled around 20% AH on Thursday following results that some are referring to as “ad-mageddon.” The long-feared internet advertising meltdown was responsible for a revenue miss in Q3, with sales coming in at $1.07B vs. expectations for $1.1B. The company also detailed a worse forecast for the coming holiday quarter, which is typically one of the busiest, saying it anticipated a revenue growth rate of 19%-20%, down from third quarter growth of 57%.

What happened? “Our advertising business was disrupted by changes to iOS ad tracking that were broadly rolled out by Apple (AAPL) in June and July,” CEO Evan Spiegel said on a conference call. “While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS.”

Over the past few quarters, direct-response advertising has grown to more than 50% of Snap’s business, but given the recent changes, “coupled with Snapchat’s existence as a mobile-only platform, our strength in DR has become a more significant headwind in the current environment.” Ad-dependent peers were also hit by the headlines, trading lower in premarket trade: Twitter (TWTR) -4.5%; Facebook (FB) -4.1%; Pinterest (PINS) -2.4%; Google (GOOGL) -1.9%.

Go deeper: Apple’s privacy change is not the only contributor of the advertising slowdown. Ad partners facing supply chain issues and labor shortages “reduced short-term appetite” to generate demand for their products, according to Spiegel, and the trends could get worse if the bottlenecks don’t clear up. It’s also an interesting instance of tech stocks getting hammered due to sale struggles in the physical world, where companies do not spend on online marketing for goods they cannot get to users (not to mention another setback to the economic recovery). (34 comments)

Updated agenda

At a CNN town hall in Baltimore last night, President Biden provided some insights into recent negotiations with Democrats over his economic agenda. The measure has stalled in the Senate due to objections from West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema, who have cited heavy spending concerns over expanding the social safety net and combating climate change. Biden is specifically looking to get a framework agreement in place, so the House could vote on a bipartisan infrastructure bill before he arrives at the UN Climate Conference in Glasgow in less than two weeks.

Highlights: Biden won’t support a work requirement for the child tax credit, the paid parental leave provision has been narrowed down from 12 weeks to 4 weeks, a proposal to make community college free would be eliminated, and money scrapped clean energy programs would likely be reallocated to other climate efforts.

Most importantly, Biden said it’s unlikely that corporate tax rate hikes will be included in the plan. “I don’t think we’re going to be able to get the vote,” he declared. “Look, when you’re in the United States Senate and you’re president of the United States and you have 50 Democrats, everyone is the president.”

Supply chain: A question was also asked if Biden would deploy the National Guard to alleviate pressure on the nation’s truckers. He responded that “the answer is yes,” though a White House official said shortly afterwards that the administration is not actively considering a deployment to ease the supply chain gridlock. “Requesting the use of the National Guard at the state level is under the purview of governors and we are not actively pursuing the use of the National Guard on a federal level.”

Last-minute payment

While it was on the brink of default heading into the weekend, China Evergrande Group (OTCPK:EGRNF) seems to have pulled off an $83.5M bond coupon payment before Saturday. A 30-day grace period would have expired tomorrow after the original missed payment date, but the drama is still far from over. Evergrande still needs to pay $573M on another four dollar notes this year and faces $7.7B in bond maturities in 2022.

Snapshot: A default could have led to the biggest corporate default in Asia, allowing creditors to declare defaults on some of Evergrande’s other debts. The company is one of China’s biggest property developers, and its most indebted, with the equivalent of more than $300B in total liabilities. Evergrande’s Hong Kong-listed stock has slumped more than 80% YTD, though shares rose as much as 5% today on the latest developments.

Some say it is kicking the can down the road, but others feel the interest payment is some good news, giving Evergrande time for asset sales and strengthening its case of an orderly restructuring. It’s already been trying to raise funds by disposing stakes in subsidiaries and a Hong Kong office building, while last month it agreed to sell most of its ownership in a Chinese commercial bank for $1.6B. It had also planned to offload a majority holding in its property management division for $2.6B, but those talks fell through this week.

Fears of contagion: Both Chinese Vice Premier Liu He and PBOC Governor Yi Gang feel that Evergrande’s risks are controllable and reasonable capital demands from property companies are being met. However, worries have roiled markets due to concerns about a potential spillover into the rest of China’s economy. The situation has already led to a string of default announcements and rating downgrades, as well as a rumbling across the $5T Chinese property sector, which accounts for a quarter of GDP by some metrics. (2 comments)

Fed ethics review

Federal Reserve officials will no longer be able to buy individual securities following the recent controversy over portfolios that resulted in the departure of two regional bank presidents. That means no more stock picking and active trading of derivatives, leaving officials to only purchase diversified investment vehicles, like mutual funds. The new restrictions will apply to both Reserve Bank and Board policymakers, as well as senior staff.

Quote: “These tough new rules raise the bar high in order to assure the public we serve that all of our senior officials maintain a single-minded focus on the public mission of the Federal Reserve,” Fed Chair Jay Powell said in a statement.

Earlier this week, The American Prospect reported that Powell also sold up to $5M in a broad index fund as the economy was recovering from the pandemic last year. The $1M-$5M sale from the Vanguard Total Stock Market Index (VTI) in October 2020 would likely hold up under the new rules, as well as the between $50K-$100K sales he made on Sept. 21. In December, Powell also sold small stakes of the Causeway International Value Fund (CIVIX), the Goldman Sachs U.S. Equity Dividend and Premium Fund (GSPKX), iShares MSCI EAFE ETF (EFA) and the iShares Russell 2000 ETF (IWM).

More details: “To help guard against even the appearance of any conflict of interest in the timing of investment decisions, policymakers and senior staff generally will be required to provide 45 days advance notice for purchases and sales of securities, obtain prior approval for purchases and sales of securities, and hold investments for at least one year. Further, no purchases or sales will be allowed during periods of heightened financial market stress.” (12 comments)

Today’s Economic Calendar
9:45 PMI Composite Flash
10:00 Fed’s Daly: “Facing an Uncertain World: the Federal Reserve and Climate Change Risk”
11:00 Jerome Powell Speech
1:00 PM Baker-Hughes Rig Count

Companies reporting earnings today »

What else is happening…

Can Trump fans make Digital World Acquisition (NASDAQ:DWAC) the next GameStop?

A second U.S. Bitcoin futures ETF (NASDAQ:BTF) is set to launch today.

Intel (NASDAQ:INTC) falls as shortages hurt PC chip business outlook.

AT&T (NYSE:T) phone subscribers, profits surprise to upside.

Chipotle (NYSE:CMG) rides higher menu prices to sizzling earnings beat.

Pfizer (NYSE:PFE) vaccine ‘highly effective’ against Delta in Israel study.

WeWork (NYSE:WE) has stellar public SPAC debut after failed IPO.

Profitability depends on business travel rebound – American Airlines (NASDAQ:AAL).

Facebook (NASDAQ:FB) slammed by oversight board for celebrity cross-check system.


Good morning. Happy Thursday.

The Asian/Pacific markets leaned down. China did well, but Japan, India and Malaysia were weak. Europe, Africa and the Middle East are currently mostly down. Turkey, Hungary and Israel are up; Poland, Russia, South Africa, Finland, Norway, Spain, Portugal and Austria are down. Futures in the States point towards a down open for the cash market.

————— Masterclass Overview –>> here —————

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

Stories/News from Seeking Alpha…

TRUTH Social

Some predicted the move since he left office, but former President Donald Trump is finally launching his own media network. The new business, called Trump Media & Technology Group (TMTG), will include a social media platform called “TRUTH Social,” as well as a subscription video-on-demand service (TMTG+) that features “non-woke” entertainment programming, news and podcasts. The company will go public via a SPAC merger with Miami-based Digital World Acquisition (NASDAQ:DWAC), which surged more than 50% premarket to $15/share.

Quote: “I created TRUTH Social and TMTG to stand up to the tyranny of Big Tech,” Trump wrote in a press release. “We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American President has been silenced. This is unacceptable. Trump Media & Technology Group’s mission is to create a rival to the liberal media consortium and fight back against the ‘Big Tech’ companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America.”

Earlier this year, Trump was restricted, and then banned, by major social media giants like Facebook (NASDAQ:FB), Twitter (NYSE:TWTR), Snapchat (NYSE:SNAP) and YouTube (GOOG, GOOGL) after the Jan. 6 storming of the U.S. Capitol. Following the incident, Parler – a free speech social network popular with conservatives – was also removed from the Apple and Google app stores, while Amazon (NASDAQ:AMZN) ended its web hosting agreement. As a result, TMTG appears to be targeting multiple fronts, saying on its website that it eventually hopes to compete against AWS and Google Cloud, as well as Disney (NYSE:DIS) and Netflix (NASDAQ:NFLX).

Along ideological lines? While “TRUTH Social” intends to be America’s “big tent” social media company that encourages “free speech,” we could be witnessing a further polarization of the corporate landscape. Once upon a time, politics was not married to the business world as it is today, and competing services may continue to sprout up as the country appears more divided. According to a survey from The Hill, 30% of respondents said they’d use a “Trump-backed social media platform,” though 54% said they wouldn’t and 16% would consider it. TRUTH Social is set for a beta launch next month and a full rollout in the first quarter of 2022. (111 comments)

Tesla hits the track

The EV maker posted record revenue and profit in Q3 as it scaled up despite some problems along the supply chain. “A variety of challenges, including semiconductor shortages, congestion at ports and rolling blackouts, have been impacting our ability to keep factories running at full speed,” Tesla (NASDAQ:TSLA) declared, as shares slipped 1.3% AH on Wednesday. However, the firm still reiterated prior guidance of “achieving 50% average annual growth in vehicle deliveries” over a multi-year horizon.

By the numbers: The company racked up $1.6B in GAAP net income ($2.1B in non-GAAP net income), while producing 237,823 vehicles in Q3 (+64% Y/Y) and delivering 241,391 (+73%). Operating margin was 14.6% of sales to easily top the guidance range and analyst expectations, while automotive gross margin came in at 30.5% vs. 28.4% consensus (and 28.8% with credits backed out). The improvement was struck even with the average selling price of a vehicle down 6% due to a shift in the model mix.

On the operations side, Tesla said its buildout for the Berlin-Brandenburg Gigafactory remains on schedule with testing of equipment well underway. It expects to receive final permit approval by the end of this year and continues to target the first Model Y production there and in Austin before 2021 comes to a close. Tesla also notched $806M in revenue from its energy business (solar deployments of 83MW were up 46%), though costs of revenue rose to $803M, the highest number in the last five quarters.

Recharging: The automaker revealed some changes to its battery cell chemistry, using lithium-iron-phosphate (LFP) for its standard range vehicles rather than nickel-cobalt-aluminum which it will continue to use in its longer-range EVs. “LFP is significantly cheaper and stable, which makes it safer,” said Sam Abuelsamid, principal analyst at Guidehouse Insights. However, the cells are less energy-dense, meaning they offer lower range for the same weight as other cells, while cold weather affects them more. (380 comments)


In a combination that could blur the landscape between fintech and social media, PayPal (PYPL) has reportedly offered $45B to buy Pinterest (PINS). The transaction would be financed mostly through stock, though the talks are at an early stage and may not lead to a deal. If it does happen, the tie-up would be the biggest acquisition of a social media company, topping Microsoft’s (MSFT) $26.2B purchase of LinkedIn in 2016.

Analyst commentary: The potential combination makes “zero sense,” Truist analyst Andrew Jeffrey wrote to clients. “We see such a move as an act of near desperation as PayPal grapples with increased Buy Button competition, a formidable new BNPL tie-up between Square (SQ) and Afterpay (OTCPK:AFTPY) and lagging Venmo monetization.” The acquisition of Pinterest could also increase risk as it could create a conflict with PayPal’s other large marketplace customers.

Others feel differently about the combination. “It would be a significant positive for PayPal’s ongoing monetization initiatives on both sides of its merchant and consumer platforms, especially if Pinterest’s social commerce platform gets integrated with Honey’s AI into PayPal’s destination app,” Wedbush analysts added in a research note. Pinterest shares climbed 10% on Wednesday following the report, while PayPal slid 5%.

Outlook: Recall that almost a week ago, co-founder and board member Evan Sharp resigned as Pinterest’s chief design and creative officer. PayPal had also been looking to boost its e-commerce offerings in recent years as shoppers increasingly buy items they see on social media. It bought Japanese “buy now, pay later” firm Paidy for $2.7B earlier this year, return-service provider Happy Returns in May, online coupon finder Honey Science for $4B in 2019 and iZettle for $2.2B in 2018. (112 comments)

Vaccine cocktails

The FDA is significantly widening America’s COVID-19 booster campaign by allowing additional doses of Moderna (MRNA) and Johnson & Johnson’s (JNJ) vaccine. The jabs will be authorized for the same population as the Pfizer-BioNTech (PFE, BNTX) booster: 65 years and older; below 65 at high risk of severe disease; and below 65 due to frequent institutional or occupational exposure. The clearance means that every COVID vaccine approved in the U.S. now also has a booster (Pfizer got the green light on Sept. 22).

On the conference call: “Vaccines are one of our greatest tools in the fight against the pandemic, and ensuring the availability of boosters for those who need them is one of our highest priorities,” announced acting FDA Commissioner Janet Woodcock.

Another interesting detail that emerged was the FDA is authorizing “mix and match” vaccines. That will allow booster doses to be administered which are different from the ones received during the original vaccination series. According to health authorities, this will help ensure doses are available to anyone who wants one, while increasing options for fully vaccinated people.

Earlier this week: Pfizer CEO Albert Bourla said that COVID-19 is “here to stay,” but he expects the medical community “should be able to have it well under control.” Bourla also sees a U.S. regulatory decision on COVID vaccines for children “in a matter of weeks” and is pushing for changes in the medical approval process. Looking longer-term, he expressed confidence that enough doses of the vaccine can be created to provide shots to the entire world “within several months.” (70 comments)

Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
9:00 Fed’s Waller: U.S. Economic Outlook and Monetary Policy
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
9:00 PM Fed’s Williams Speech

Companies reporting earnings today »

What else is happening…

Crypto stocks rise with Bitcoin (BTC-USD) trading at new all-time high.

IBM (NYSE:IBM) shares slump 5% AH as tech services sales drop.

5G boosts Verizon’s (NYSE:VZ) postpaid users and full-year profit view.

Exxon (NYSE:XOM) debates abandoning some of its biggest projects – WSJ.

Baker Hughes (NYSE:BKR) slides on weaker than expected Q3 earnings, revenues.

Monetary policy: Fed’s Mester doesn’t see rate hikes ‘any time soon.’

Biogen (NASDAQ:BIIB) raises guidance despite slow uptake of new Alzheimer’s drug.

Evergrande (OTCPK:EGRNF) tumbles after sale of services unit collapses.

Coconut water brand The Vita Coco Company (NASDAQ:COCO) prices IPO below range.

Oatly (NASDAQ:OTLY) plans new research and innovation center at Lund University.


Good morning. Happy Wednesday.

The Asian/Pacific markets were mixed. Hong Kong and Australia did well; China, South Korea and India were weak. Europe, Africa and the Middle East are currently mostly up. Greece, Switzerland, Norway, Hungary, India, Portugal and Saudi Arabia are up. Futures in the States point towards a flat open for the cash market.

————— Masterclass Overview –>> here —————

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

Stories/News from Seeking Alpha…

Mandate battles

There were fights over lockdowns, then face masks, but now the battle over vaccine mandates appears to be heating up across the country. On September 9, President Biden announced a new mandate that would apply to businesses with 100 or more employees, which is expected to cover some 80M workers nationwide. While it won’t go into effect until federal regulators issue a rule, the mandate is expected to happen soon (it’s also separate from an order that targets federal contractors).

Bigger picture: Shortly after the directive was announced, Arizona became the first state to sue Biden over the workplace mandate, while Montana preempted the federal action by passing an anti-mandate law. Florida has also promised to challenge the Biden administration’s rule in federal court, though a recent challenge in Maine (based on religious exemptions) was rejected by the Supreme Court, and a bill that would have banned employers from requiring employees to be vaccinated failed in the Texas Legislature. States are not the only ones responding to the mandate as corporations who are most affected by the order express their opinions.

On Tuesday, General Electric (NYSE:GE) and Union Pacific (NYSE:UNP) announced that they would comply with the vaccine mandate deadline (Dec. 8) set by the Biden administration for companies that are federal contractors. Others, like UPS (NYSE:UPS) and Disney (NYSE:DIS) met with White House officials yesterday to discuss the private sector vaccine plan amid concerns it could worsen labor shortages and supply chain troubles. Meanwhile, Southwest Airlines (LUV) dropped a proposal to put unvaccinated staff on unpaid leave starting in December, while pilot labor unions have sought to block the mandates or sought alternatives such as regular testing.

Proof of vaccination: Some cities, like NYC, San Francisco and New Orleans, have taken vaccine mandates one step further, requiring indoor businesses to ask for proof of a dose before giving service. Some backlash has grown in these areas as well, with an In-N-Out in Fisherman’s Wharf briefly shut down by the health department for not enforcing the city’s vaccine mandate. “We refuse to become the vaccination police for any government,” said Arnie Wensinger, In-N-Out’s chief legal and business officer. “This is clear governmental overreach and is intrusive, improper, and offensive.” (18 comments)

Earnings roll in

After an initial post-market rise following its earnings report, Netflix (NFLX) turned 2% lower as investors began digesting some of the streamer’s numbers. While the company added a net 4.38M global subscribers – better than its own guidance for 1.54M, as well as analyst expectations for 3.5M – forecasts for the coming quarter (8.5M subs) stayed in line with last year’s holiday period despite a slew of new shows and programming.

Quote: We’re in uncharted territory,” co-CEO Reed Hastings said on a post-earnings call. “We have so much content coming in Q4 like we’ve never had, so we’ll have to feel our way through and it rolls into a great next year also.”

Netflix is also tweaking its controversial approach to measuring shows’ success, which had looked at the number of accounts that had viewed a title for at least two minutes in its first 28 days on the service. It will now focus on total hours viewed per title. That will make a slight difference in its rankings, but “we think engagement as measured by hours viewed is a slightly better indicator of the overall success of our titles and member satisfaction,” adding it also gives proper credit to rewatching a show, traditionally a big draw for the service.

Squid Game: “A mind-boggling 142M member households globally have chosen to watch the title in its first four weeks.” By comparison, under Netflix’s now-former measurement system, Bridgerton’s Season 1 was the most-viewed program (82M accounts) and Extraction the top movie (99M accounts). Stay tuned for later this week, when Squid Game marks its first full week in Nielsen’s time-based rankings charts. (14 comments)

Rebranding Facebook

All the bad press Facebook (FB) has experienced in recent weeks will warrant a name change, according to The Verge’s Alex Heath. The social network is still reeling from a massive internal document leak that showed Instagram made body image issues worse for a substantial minority of teen girls, as well as a ramping up of regulatory pressure and Congressional testimony. In fact, the rebranding could arrive in the coming week, per the report.

Something bigger? The move wouldn’t just clear the company of bad vibrations, but follow in the footsteps of Google’s (GOOG, GOOGL) parent company changing to Alphabet: Facebook wants to be known for more than social media. A separate parent name could put Facebook under a larger umbrella, along with Instagram, WhatsApp, Oculus and more.

It could also be good timing, given CEO Mark Zuckerberg’s ambition to be the “Metaverse” company. As described in Wall Street Breakfast earlier this week, the Metaverse is an “embodied internet,” where people can “interact in immersive, 3D and shared digital worlds.” Facebook plans on hiring 10,000 skilled engineers across the EU over the next five years for the effort, which it calls “one of its most pressing priorities.”

Possible date? Zuckerberg plans to talk about the name change at Facebook’s Connect conference on Oct. 28, but could unveil it sooner. (38 comments)


While the company is still bleeding cash, WeWork (WE) is finally set to list on the public markets. Special purpose acquisition company BowX Acquisition’s (BOWX) shareholders have voted to approve a business combination with the flexible workspace provider at a $9B valuation, which will list on the NYSE tomorrow under ticker “WE.” WeWork lost $2.1B in the first quarter of the year, as well as $3.2B over 2020.

Backdrop: After filing IPO paperwork back in August 2019, WeWork faced intense scrutiny of its finances and leadership from investors and the media. A month later, the firm put its IPO on ice, CEO and co-founder Adam Neumann resigned, while SoftBank (OTCPK:SFTBY) – WeWork’s biggest investor – took control of the company. The office space provider’s valuation was then cut to as low as $10B from $47B. However, in the past year, WeWork has made changes to its corporate governance, announced large staff cuts and instituted a massive cost-cutting drive as it targets positive cash flow in 2021.

Outlook: Shares of BowX Acquisition tumbled nearly 10% on Tuesday after news of the merger broke, but have rebounded 3.5% in premarket trade. In a world that has gone through the coronavirus pandemic, many have found the appeal of work-from-home, which grants a more flexible framework and time with the family. However, the transition to remote work could also increase the appeal of WeWork’s pitch to companies that want satellite offices for their workers or space for just a few days per week. (4 comments)

Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
12:00 PM Fed’s Evans: “Racism and the Economy: Focus on the Wealth Divide”
12:00 PM Fed’s Bostic: “Racism and the Economy: Focus on the Wealth Divide”
12:00 PM Fed’s Kashkari: “Racism and the Economy: Focus on the Wealth Divide”
1:00 PM Fed’s Quarles: Economic Outlook
1:00 PM Results of $24B, 20-Year Bond Auction
1:45 PM Fed’s Bullard: “Racism and the Economy: Focus on the Wealth Divide”
2:00 PM Fed’s Beige Book
8:35 PM Fed’s Daly Speech

Companies reporting earnings today »

What else is happening…

Trade volume of ProShares Bitcoin Strategy ETF (NYSEARCA:BITO) just shy of $1B.

NBA scores first crypto sponsorship from Coinbase (NASDAQ:COIN).

Tesla (NASDAQ:TSLA) earnings on tap, but SpaceX could make Musk a trillionaire.

Procter & Gamble (NYSE:PG) expects higher commodity, freight costs ahead.

J&J (NYSE:JNJ) keeps vaccine sales outlook unchanged following Q3 miss.

Pfizer (NYSE:PFE) COVID vaccine highly protective in 12-18 age group.

Google (NASDAQ:GOOGL) faces hefty Russian fine over illegal online content.

United (NASDAQ:UAL) takes off after earnings beat, optimistic European outlook.

Cathie Wood: Deflation is a bigger threat than inflation; here’s how she’s playing it.


Good morning. Happy Tuesday.

The Asian/Pacific was markets leaned up. Japan, China, Hong Kong, South Korea, Taiwan and Singapore led while India and Thailand were weak. Europe, Africa and the Middle East are currently mostly up. Turkey, Russia, Greece, South Africa, Finland, Norway, Spain and Portugal are up, Switzerland is down. Futures in the States point towards a positive open for the cash market.

————— Masterclass Overview –>> here —————

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…


The crypto industry is celebrating a long-awaited milestone today as the first exchange-traded fund linked to Bitcoin (BTC-USD) launches on the New York Stock Exchange. The ProShares Bitcoin Strategy ETF (BITO) does not invest directly in Bitcoin, but will rather hold futures contracts of the digital currency – meaning it will have a very high correlation with Bitcoin, but won’t mirror the token’s exact value. It will also cost more to own the fund, but some may be willing to pay up for institutional level custody, execution and security.

Bigger picture: The new approval could bring more investors into the crypto market as it comes with a more regulated structure. That means 401(k)s and IRAs could now have an allocation of the sector, while the ETFs will also be available through brokerage accounts. Until now, Bitcoin has been a favorite among tech-savvy or younger traders, who are more comfortable with its technology, as well as the risks or price swings involved with their investments. At the time of writing, Bitcoin is up 1.7% to $62,324.

While the SEC has recently taken a tougher stance on crypto, the ETF green light highlights what structure the agency is currently able to tolerate. Bitcoin futures trade on the Chicago Mercantile Exchange and are regulated by the Commodity Futures Trading Commission, while Bitcoin-related ETFs have already launched in other countries like Canada. There are also concerns about purchasing Bitcoin through digital currency exchanges, given worries about hackers or losing so-called private keys.

Go deeper: The ProShares Bitcoin Strategy ETF might be the first to list in the U.S., but it sure won’t be the last. Grayscale Investments is jumping on the train with plans to convert the Grayscale Bitcoin Trust (OTC:GBTC) – which has $38.7B assets under management – into a spot ETF. Other issuers that are excited about the recent approval include names like Valkyrie, Galaxy Digital, VanEck, ETF Series Solutions and ARK Invest. (13 comments)

Under the microscope

Stock index futures are inching up, with contracts linked to the Dow, S&P 500 and Nasdaq ahead by 0.3%, before Week 2 of earnings season kicks into high gear. Investors will be particularly parsing reports this week, as results from the banks and financials only provided metrics on spending and lending in the economy. As other factors continue to bite businesses and consumers alike, it will be crucial to see how supply chain disruptions, inflation, higher energy costs and labor shortages affected the biggest U.S. corporations in Q3.

Before the bell: Procter & Gamble (PG), Johnson & Johnson (JNJ), Philip Morris (PM) and Halliburton (HAL).

After the close: Netflix (NFLX), Intuitive Surgical (ISRG) and United Airlines (UAL).

“Whether we end up getting this finishing move at the index level this year or not will depend largely on retail participation, the message that Q3 earnings bring from a guidance standpoint, and the path of PMIs into year end,” said Mike Wilson, chief U.S. equity strategist at Morgan Stanley.

On the economic calendar: Clues on the state of the property market are due out at 8:30 a.m. ET. U.S. housing starts is expected to come in at a 1.621M annual pace in September, versus the 1.615M seen in August, which was much higher than expected. Builders have been caught between strong demand from buyers and shortages of labor and materials, and that could have a powerful multiplier effect throughout the economy.


Hypersonic missiles are on the radar following a report from the Financial Times stating that the country conducted a nuclear-capable glide vehicle test in August that “circled the globe in low-Earth orbit.” The missile missed its target by “about two-dozen miles,” but the “advanced space capability caught U.S. intelligence by surprise,” according to the five unnamed sources. China has denied the latest headlines, claiming instead that it was carrying out a spacecraft check focused on reusable technology.

Quote: “We watch closely China’s development of armament, advanced capabilities and systems that will only increase tensions in the region,” Defense Secretary Lloyd Austin said on Monday, without commenting on the report.

According to the FT, this test showed two alarming advances by China. The first is a Fractional Orbital Bombardment System, which means the country could, in theory, send missiles over the South Pole (most U.S. defense systems are concentrated along the northern polar route). The second is the hypersonic glide vehicle itself, which flies at Mach 5 and is maneuverable in flight – compared to the fixed parabolic trajectory of ballistic missiles – making it harder to track.

Policy steps: Advances in hypersonics by Beijing could strengthen concerns among those in Washington who think the U.S. needs to do more to stay ahead of China. The Biden administration is also in the middle of a Nuclear Posture Review, which is mandated by Congress to decide U.S. nuclear policy (how many weapons the country needs to stockpile, modernize, deploy, etc.) Some stocks that could benefit from additional hypersonic spending include Lockheed Martin (NYSE:LMT), Raytheon (NYSE:RTX), Northrop Grumman (NYSE:NOC), Boeing (NYSE:BA), Kratos (NASDAQ:KTOS), L3Harris (NYSE:LHX) and Aerojet Rocketdyne (NYSE:AJRD). (6 comments)

Fed ethic rules?

Fed Chair Jerome Powell sold up to $5M in a broad index fund as the economy was recovering from the pandemic last year. In a disclosure to the U.S Office of Government Ethics, Powell notes a sale from the Vanguard Total Stock Market Index (NYSEARCA:VTI) of between $1M and $5M in October 2020. He also sold between $50K and $100K of the index on Sept. 21.

Snapshot: The sale was first reported by The American Prospect, whose headline said Powell unloaded while the market was “tanking.” Putting it in perspective, the Fed chief traded before a 1.5% pullback after the V-shaped recovery in shares from the pandemic nadir. The S&P then resumed its march higher, setting all-time highs. VTI is up more than 35% since he sold.

In December, Powell sold smaller stakes, up to $250K, of the Causeway International Value Fund (CIVIX), the Goldman Sachs U.S. Equity Dividend and Premium Fund (GSPKX), the iShares MSCI EAFE ETF (EFA) and the iShares Russell 2000 ETF (IWM). It was previously reported that Powell owned securities that the Fed was buying in 2020.

Outlook: Powell’s holdings and those of other Fed officials came under scrutiny earlier this year, with Dallas Fed Robert Kaplan and Boston Fed Eric Rosengren leaving their positions after trades within Fed rules that were nevertheless controversial. Those developments also led to Powell opening an ethics review on financial holdings. Separately, Senator Elizabeth Warren, who opposes Powell’s renomination as Fed chairman, has called for SEC investigations into Kaplan, Rosengren and Fed Vice Chairman Richard Clarida for insider trading. (96 comments)

Today’s Economic Calendar
8:00 Fed’s Daly Speech
8:30 Housing Starts and Permits
8:50 Fed’s Harker: “C3: Cybersecurity Collaboration & Cooperation”
8:55 Redbook Chain Store Sales
1:00 PM Fed’s Bostic: “Exploring Careers in Economics”
2:50 PM Fed’s Bostic: “Back to Work: Helping the Long-Term Unemployed”

Companies reporting earnings today »

What else is happening…

New MacBooks (NASDAQ:AAPL) move away from chip partner Intel (NASDAQ:INTC).

vAmazon (NASDAQ:AMZN) to hire 150K seasonal employees for holiday season.

Disney (NYSE:DIS) dips as Barclays goes Neutral on streaming slowdown.

FDA may authorize COVID vaccine ‘mix and match’ this week – NYT.

Alibaba (NYSE:BABA) reportedly set to premiere its own server chips.

Videogame sales rise for fifth straight month, paced by consoles.

World’s largest uranium producer to start physical uranium fund.


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

The Asian/Pacific was mixed and little changed. India and Malaysia moved up; Japan and Taiwan posted losses. Europe, Africa and the Middle East currently lean down. Poland, the UAE and Norway are up; the UK, France, Germany, Russia, Hungary, Spain, the Netherlands, Italy, Portugal and the Czech Republic are down. Futures in the States point towards a gap down open for the cash market.

————— Masterclass Overview –>> here —————

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

Stories/News from Seeking Alpha…

Squid millions

Squid Game, the latest megahit from Netflix (NASDAQ:NFLX), could be worth nearly $900M for the streaming giant, according to an internal document from the company. The nine-episode horror-thriller has risen sharply in the headlines since its debut on September 17, and ranks No. 1 in several countries, including the United States. The South Korean show involves heavily indebted people who compete in children’s games for a chance to win big cash prizes, though the challenges come with fatal consequences.

By the numbers: Netflix measures the success of its shows in “impact value,” which combines data like how often a show is watched by new customers, existing customers, its cost efficiency and impact on long-term viewership. Squid Game has created about $891M in “impact value,” making it a highly profitable series for the streaming giant. It only costs the company around $2.4M per episode, meaning the entire first season had production expenses of just $21.4M (41.7x in efficiency).

About 132M people have watched at least two minutes of Squid Game in the show’s first 23 days, blowing past the 82M Netflix record set by Bridgerton. Netflix also estimates that 89% of people who started the show watched at least 75 minutes (more than one episode) and 66% of viewers, or 87M people, have finished the series in the first 23 days. That means subscribers have spent over 1.4B hours watching the show, which is more than double the total hours watched for Bridgerton.

Market movement: The viewership figures could go a long way for Netflix, which reported its slowest pace of subscriber additions since 2013 in the first half of the year. In fact, the stock is up 7% since Squid Game was released on Sept. 17 (check out the chart above), and many analysts expect the show to boost Q3 earnings, which the company will release after the bell tomorrow. Squid Game has already resulted in Baird, Truist, KeyBanc and others to raise their price target on shares, while J.P. Morgan believes net subscriber adds will come in around 3.5M for the quarter and 8.5M for Q4.

Hollywood shutdown averted

Meanwhile… a strike that would have disrupted TV and movie production nationwide has been avoided at the eleventh hour. Over the weekend, a three-year deal was struck between the International Alliance of Theatrical Stage Employees (IATSE), which includes film crews across the country, and the Alliance of Motion Picture and Television Producers (AMPTP), which represents major Hollywood studios. The developments could have severely impacted the operations of streamers like Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX), as well as major film studio stocks like Disney (NYSE:DIS), Universal (NASDAQ:CMCSA), Warner Bros. (NYSE:T) and Sony (NYSE:SONY).

What’s in the contract? A 10-hour turnaround between shifts, a weekend rest period of 54 hours, increased health and pension plans, a 3% rate increase every year for the duration of the contract, and higher penalties for companies that don’t provide meal breaks. Included in the deal are a wide swath of industry workers, ranging from prop makers and makeup artists to camera operators and studio mechanics. The IATSE acts on behalf of 150,000 members in the U.S. and Canada (60,000 of them are currently covered by contracts being renegotiated).

“This is a Hollywood ending,” IATSE International President Matthew Loeb said in a statement. “Our members stood firm. They’re tough and united. We went toe to toe with some of the richest and most powerful entertainment and tech companies in the world, and we have now reached an agreement with the AMPTP that meets our members’ needs.”

Outlook: Changing dynamics in the labor market have put employees in the driver’s seat and have allowed unions to flex their muscles. 10,000 workers at John Deere (DE) went on strike last Thursday over wages and benefits, joining the industrial action seen at Kellogg (K), where 1,400 workers walked off the job because of seven-day work weeks and a two-tier retirement system. A Hollywood strike would have hit studios hard as they recover from theater closures and pandemic shutdowns, and could have led many shows to shorten, postpone or cancel new seasons.

China’s slowing growth

Power shortages, COVID outbreaks, supply chain problems, industry crackdowns and the China Evergrande (OTCPK:EGRNF) debt crisis all weighed on China’s economy in the third quarter. Data released overnight showed that GDP grew a disappointing 4.9% Y/Y, missing expectations for a 5.2% expansion, and marking the weakest clip since Q3 of 2020. That comes after a blazing 18.3% growth rate recorded in Q1 and the 7.9% seen in the three months ending in June.

Quote: “The domestic economic recovery is still unstable and uneven,” National Bureau of Statistics spokesperson Fu Linghui said at a news briefing.

China was the only major global economy to grow annually during the pandemic-induced slowdown (its economy expanded 2.3% in 2020). The nation was also quick to pare back stimulus enacted in the immediate aftermath of the pandemic last year, while Beijing’s policymakers have so far brushed off economic headwinds, saying they wouldn’t resort to liquidity or cutting rates to drive up the growth rate in Q4. China is targeting a full-year GDP target of 6% or more for 2021 and estimates even stretch to growth of more than 8%.

Some analysts feel differently: “Most of the [negative] factors are policy-driven… the economy is having a lot of pain points and these pain points are not going away soon because policies are here to stay, and therefore it will continue into 2022,” said Iris Pang, chief economist for Greater China at ING. “We expect more measures to shore up growth, including ensuring ample liquidity in the interbank market, accelerating infrastructure development and relaxing some aspects of credit and real estate policies,” added Tommy Wu, lead economist at Oxford Economics.

Into the Metaverse

Facebook (NASDAQ:FB) is diving deeper into Metaverse as the company heads up a recruitment drive to create a new digital world. It plans on hiring 10,000 high-skilled engineers across the European Union over the next five years, calling the effort, “one of Facebook’s most pressing priorities.” Resumes will be looked at in Germany, France, Italy, Spain, Poland, the Netherlands and Ireland.

What is the Metaverse? CEO Mark Zuckerberg describes it as an “embodied internet,” which will be a major driver of new technology investment. The term was coined in the 1992 dystopian novel Snow Crash, where it refers to how a virtual reality-based Internet might evolve in the near future. Today, it’s widely used to describe immersive, shared digital worlds, where multiple people can interact in a 3D environment.

“We believe this is going to be the successor of the mobile Internet,” Zuckerberg said on a Q2 earnings call in July. “The defining quality of the Metaverse is presence: creation, avatars, and digital objects. In addition to being the next generation of the Internet, the Metaverse is also going to be the next chapter of us as a company.”

Go deeper: Last month, Facebook unveiled plans to invest $50M to develop the Metaverse, but noted that parts of the new platform could take 10 to 15 years to fully develop. Other companies already have an early foothold in the space like Roblox (NYSE:RBLX) and Fortnite maker Epic Games. Facebook is also building out products that can be shared with the new technology, like a VR remote work app that allows Oculus users to hold meetings in their avatars.

Today’s Economic Calendar
9:15 Industrial Production
10:00 NAHB Housing Market Index
2:15 PM Fed’s Kashkari Speech
4:00 PM Treasury International Capital

Companies reporting earnings today »

What else is happening…

Bitcoin (BTC-USD) retakes $60K on news of imminent Bitcoin Futures ETFs.

Zillow’s (NASDAQ:Z) home-flipping service pauses to work through backlog.

Banks feel wage inflation as competition for talent rises.

What’s next for movies? Morgan Stanley does a cinema sweep.

Apple (NASDAQ:AAPL) to show the Mac still matters in an iPhone world.

U.S. households likely to pay much higher heating bills this winter.

Airlines losing pricing power with demand easing – Sector Watch.


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