Before the Open (Nov 1-5)

Good morning. Happy Friday. Happy Employment Numbers Day.

The Asian/Pacific markets leaned up. India, Taiwan, New Zealand, Singapore and the Philippines did well; Japan, China and Hong Kong were weak. Europe, Africa and the Middle East currently lean to the upside. The UK, France, Russia, Spain, Italy, Austria and the Czech Republic are up; Denmark, Greece and Portugal are down. Futures in the States point towards a positive open for the cash market.

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

Stories/News from Seeking Alpha…

Jobs Day

It’s been a long week of economic data, high-profile events and Q3 earnings, but there’s one more to go before it comes to a close. The Labor Department will report the latest numbers on job growth this morning, with the figures set for release at 8:30 a.m. ET. Headwinds like the summer surge in COVID-19 infections are hoped to have subsided, giving more evidence that economic activity regained some momentum early in Q4, though seasonal hiring and worker shortages have been wild cards, weighing on recent reports.

Snapshot: Consensus estimates call for 450K jobs added in October, though September’s report totaled 194K additional jobs, far short of a forecast of 500K. The unemployment rate is expected to tick down to 4.7% from 4.8%, while hourly wages are expected to climb by 4.9% on a year-over-year basis. That last number will be especially important for investors, given that the market is hyper-focused on inflation and whether it will continue to run hotter than expected.

“[The] payrolls numbers become even more significant, as it is the first full month of hiring following the expiration of federal enhanced unemployment benefits, while public health has simultaneously improved and labor demand has remained strong,” noted Chris Hussey, managing director at Goldman Sachs.

Outlook: If job reports over the next few months point to stronger hiring, the Fed could accelerate its newly announced tapering plans. On the flip side, the central bank’s announcement this week put markets on high alert for inflation, meaning it will be more sensitive to economic reports in the near-term. The ADP National Employment Report already showed an acceleration in private payrolls on Wednesday, while the number of Americans filing new claims for unemployment benefits has remained under 300K for four straight weeks.

Losing speed

Peloton (PTON) fell off the exercise bike late Thursday as shares cratered 30% to $60 in AH trading. The company slashed its annual revenue forecast by as much as $1B ($4.4B to $4.8B vs. a prior view of $5.4B), and cut estimates for subscribers and profit margins. It was also impacted by the unusual year-ago comparisons, as well as widely-reported supply chain problems and commodity cost pressures.

What happened? As people return to the gym following a pandemic hiatus, demand for Peloton equipment is not what it once was. Even before the update, the stock was down about 40% YTD (and tumbled 4% in the session prior to earnings). The softer than anticipated start to Q2 challenged visibility into near-term operating performance and lead Peloton to subsequently “recalibrate” its fiscal year outlook.

Back in August, the company hurt its profitability by cutting the price of its original bike by $400. Peloton further joined a chorus of corporations slamming Apple’s ad-related privacy changes, which have made it more difficult to target shoppers. Attempts to scale back costs won’t begin to show up for a quarter or two, while the firm hopes to be profitable before EBITDA by fiscal 2023.

Response from Peloton: “We remain convinced that the growth opportunity for Peloton is substantial and this informs our decision to prioritize accessibility and household acquisition over near-term profitability, particularly as our industry-leading net promoter scores and retention rates support a very strong consumer LTV (lifetime value) and unit economics.”

Vaccine mandate

The Biden administration has unveiled the details of its private sector vaccine mandate, which was first announced in September. Companies subject to the rules must guarantee that employees who aren’t vaccinated against COVID produce a negative test at least weekly and wear a mask in the workplace. Employers are also not obligated to provide or pay for the tests, only if collective bargaining agreements require them to do so.

Bigger picture: The directive will apply to businesses with 100 or more employees, covering 84M workers nationwide. Employers who don’t adhere to the requirements could face penalties of up to $13,653 for each reported violation, while the Occupational Safety and Health Administration will also check on compliance through company record-keeping and some in-person inspections. The mandate will come into force on Jan. 4, a month after a different vaccine directive goes into effect for federal contractors.

“Vaccination requirements are good for the economy,” President Biden wrote in a White House statement. “While I would have much preferred that requirements not become necessary, too many people remain unvaccinated for us to get out of this pandemic for good.”

Statistics: 37% of unvaccinated workers say they would leave their jobs rather than comply with a jab or testing mandate, according to the Kaiser Family Foundation. Another 46% would get tested weekly, while 11% say they would get the shot (6% don’t know or refused to answer the poll conducted between Oct. 14-24). The mandate comes after a record 4.3M workers quit their jobs in August, the highest turnover in 20 years, and amid widespread concerns about supply chain bottlenecks and an economy that’s still in recovery mode.

Bitcoin throwdown

New York had been weighing legislation to ban Bitcoin (BTC-USD) mining for three years (so it could run an assessment on greenhouse gas emissions), but the times have quickly changed. On Thursday, New York City mayor-elect Eric Adams announced that he’ll take his first three paychecks in Bitcoin once he takes office in 2022. “NYC is going to be the center of the cryptocurrency industry and other fast-growing, innovative industries! Just wait!” he said via tweet.

Upping the ante: The declaration comes two days after Miami mayor Francis Suarez said he’ll take his next paycheck in 100% Bitcoin. Last month, Suarez proclaimed that Miami should become “the crypto capital of the world,” saying he’d issue a request for a proposal to enable the city’s residents to pay fees, and maybe someday taxes, in Bitcoin. The policies have already begun to attract investment, with startups, venture capital and crypto exchanges relocating or opening additional offices in the city.

Go deeper: Bitcoin 2021, the largest conference focused on Bitcoin, took place in Miami this summer. The event was sold-out with a crowd of 12,000 attendees, and thousands more participating throughout the coastal metropolis. While Miami has been trying to attract Bitcoin miners to make use of the region’s nuclear power, New York has been another popular destination due to its cheap upstate energy prices and chilly climate (19.9% of the U.S. Bitcoin hashrate is in the state).

Today’s Economic Calendar
8:30 Non-farm payrolls
9:30 Fed’s George Speech
1:00 PM Baker-Hughes Rig Count
3:00 PM Consumer Credit

Companies reporting earnings today »

What else is happening…

Surprise! Bank of England defies expectations by deciding not to raise rates.

Uber (NYSE:UBER) riders return, but guidance leaves investors wanting more.

Pinterest (NYSE:PINS) profit and engagement positives outweigh user growth.

OPEC sticks with planned gradual oil production hike, defying U.S. pressure.

Square (NYSE:SQ) expenses continue to grow, Q3 revenue falls Q/Q.

Airbnb (NASDAQ:ABNB) sees surge in home rentals as travel picks up.

Boeing (NYSE:BA) shareholders to settle lawsuit over 737 MAX board oversight.

Moderna (NASDAQ:MRNA) drags down vaccine developers after slashing outlook.

Occidental Petroleum (NYSE:OXY) posts easy Q3 beat on higher oil prices.

Etsy (NASDAQ:ETSY): We continue to grow even without pandemic tailwind.

Penn National (NASDAQ:PENN) sinks to 52-week low after Dave Portnoy article.


Good morning. Happy Thursday.

The Asian/Pacific markets closed mostly up. Japan, China, Hong Kong, India and Thailand did led. Europe, Africa and the Middle East are currently doing well. The UK, Denmark, Poland, Turkey, Germany, Norway, Hungary, the Netherlands and the Czech Republic are leading. Futures in the States point towards a down open for the cash market.

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

Stories/News from Seeking Alpha…

Powell’s patience

Stocks are continuing their march higher following a predicted move by the Fed to wind down its pandemic-era bond purchases. The central bank will cut its monthly Treasury purchases by $10B and mortgage-backed securities by $5B, bringing an end to the program in mid-2022. Prior to the announcement, the Dow and S&P 500 were trending down, but picked up after the decision was announced and closed in positive territory.

Markets still at records? Fed Chair Jerome Powell highlighted that tapering doesn’t mean policymakers will hike interest rates any time soon. He also held to the belief that high inflation would prove “transitory,” and would not likely require a rapid change in policy. An accompanying statement still hedged that risk, warning that supply chain imbalances have meant “sizable price increases in some sectors,” though Fed will continue to be “patient” and “monetary policy will continue to provide strong support to the economic recovery.”

“This taper was probably the best telegraphed or advertised move in monetary policy history,” explained Art Hogan, chief market strategist at National Securities Corporation. “It was more dovish than markets expected,” added Mona Mahajan of Edward Jones. “Anytime there’s a whiff of lower rates, we tend to get favorable market reactions.”

Outlook: Some central banks are getting more nervous about inflationary pressures. The Bank of England today is likely to become the first leading central bank to tighten policy in the “post-pandemic” era, with money markets predicting an at least 15 basis point move higher. The BOE last raised its official rate in August 2018, but cut it to an all-time low of 0.1% at the start of the coronavirus crisis.

Campaign commences

Some pediatrician’s offices and hospitals began giving shots to children between the ages of 5 and 11 on Wednesday, a day after the CDC recommended the use of Pfizer-BioNTech’s (PFE, BNTX) vaccine for the age group. Government officials expect the campaign to pick up in earnest next week, when many school-based clinics and pharmacies start inoculating children. The Biden administration has already procured 65M doses for kids, with nearly 28M children in that age bracket in the U.S.

How does it work? Children aged 5-11 will get two shots of the vaccine three weeks apart from each other, but at a lower dosage and different packaging than used for adults. Kids that are even younger will have to wait longer. Pfizer has said results from a study on vaccines in children ages 6 months up to 5 years old could come during the fourth quarter of 2021.

Health professionals point to the data, which shows that the vaccine helps prevent disease, and those that do catch COVID are less likely to suffer severe complications. Children also spread the virus and can be vectors for infection, while mental health and well-being is another area of focus. Others that are more hesitant about giving their kids the jab say that children are not likely to suffer severe illness and there might be some unknown long-term side effects. COVID also appears to be different than viruses like polio and measles, which if vaccinated against as a child, the body will recognize at a much later date (no need for annual or semi-annual boosters).

Survey time: A poll from the Kaiser Family Foundation in September found that 34% of parents would vaccinate their 5-11-year-old kids if the vaccine was authorized by the FDA. Another 37% would “wait and see,” 24% would “definitely not” and the last 7% would do so only if required. Federal scientists also estimate that as many as 40% of children aged 5 to 11 nationwide have already been infected with COVID-19.

Meme mania

Meme stocks are getting some love again as Bed Bath & Beyond (BBBY) and Avis Budget (CAR) remind retail investors of squeeze potential. Shares of BBBY finished the day up 15% on Wednesday as an accelerated share buyback plan and partnership with Kroger (KR) reignited retail interest in the heavily shorted stock. Meanwhile, shares of CAR skyrocketed over 105% on Tuesday, spurring a move in the Dow Transports (DJT) and sending the index up more than 2,000 points at one point.

Other movement: It wasn’t long before the usual suspects joined the rally, including GameStop (GME) and AMC (AMC). Both closed up 5% yesterday, while another meme favorite, BlackBerry (BB), rose as much as 8.5%.

The movement is also not limited to dinging the shorts, but is also part of a recent trend into swarm trading. The tactic sees people pile into certain names – often only for a day (or hours) – ignoring fundamentals, technicals and other catalysts (except options activity perhaps). They ride the wave up until the last trader is left holding the bag, or keep holding (diamond hands) if the sentiment continues.

Honorable mentions? Think back to the recent launch of the Trump SPAC, when DWAC surged from $10 to $131 over a session and a half, or Tesla’s (TSLA) moonshot over $1T last week despite no contract with Hertz (OTCPK:HTZZ) for electric vehicles.

Oil prices

OPEC and its allies, a group collectively referred to as OPEC+, are unlikely to open the taps today as the world’s top oil producers meet for their latest meeting. The program “is working well and there is no need to deviate from it,” according to Angola Oil Minister Diamantino Pedro Azevedo, while Kuwait expressed additional sentiment that oil markets were “well-balanced.” Policy set back in August saw OPEC+ gradually increase oil production by 400K barrels per day each month, though that format is facing increasing diplomatic pressure.

Quote: “I do think that the idea that Russia and Saudi Arabia and other major producers are not going to pump more oil so people can have gasoline to get to and from work, for example, is not, is not, right,” President Biden said Sunday at the G20 meeting in Rome. “On the surface, it seems like an irony, but the truth of the matter is, everyone knows that idea that we’re going to be able to move to renewable energy overnight… it’s just not rational.”

Oil prices have hit their highest levels since 2014 and that’s not sitting well with the consumer. West Texas Intermediate (CL1:COM) is up more than 70% this year, while Brent crude (CO1:COM) has advanced more than 60%, and both are trading above $80 a barrel. It’s also being felt at the pump, with American gasoline (XB1:COM) at seven-year highs.

Analyst commentary: “For now, we still expect to see OPEC+ members remain in favor of keeping oil markets tight, taking advantage of the elevated prices to improve fiscal accounts,” said Edward Bell, senior director of market economics at Emirates NBD. Oil importers also can’t do much to force OPEC’s hand and the U.S. call for OPEC countries to pump more oil also contradicts its purported aim to lead globally in climate change policy. As a result, “we remain of the view that oil prices will stay high until the end of 2021 and likely bleed into the early parts of next year.”

Today’s Economic Calendar
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Goods and Services Trade
8:30 Productivity and Costs
10:30 EIA Natural Gas Inventory
1:50 PM Fed’s Quarles Speech
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening…

Cathie Wood backtracks her steps on Zillow (NASDAQ:Z) and dumps shares.

Qualcomm (NASDAQ:QCOM) surges on strong holiday quarter demand outlook.

Roku (NASDAQ:ROKU) slides amid slower player sales, light Q4 guidance.

Deere (NYSE:DE) digs in, says rejected labor deal is ‘best and final’ offer.

MGM Resorts (NYSE:MGM) plans to sell Mirage casino in Las Vegas.

Fastly (NYSE:FSLY) shares climb 5% on strong revenue report and outlook.

Fisker (NYSE:FSR) on track for first vehicle launch at end of 2022.

Hertz (OTCPK:HTZZ) want to return to the Nasdaq, files secondary offering.

Trendy debut… Sneaker maker Allbirds (NASDAQ:BIRD) flies in IPO.


Good morning. Happy Wednesday.

The Asian/Pacific markets leaned down. Australia and Indonesia did well; Japan, Hong Kong, South Korea, and the Philippines were weak. Europe, Africa and the Middle East currently lean down. South Africa, Spain, Austria and the Czech Republic are up; the UK, Denmark, Russia, Finland, Portugal and Saudi Arabia are down. Futures in the States point towards a mixed open for the cash market.

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

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

Stories/News from Seeking Alpha…

Taper is near

The Federal Reserve will conclude its latest two-day meeting this afternoon and the stakes couldn’t be higher. The central intends to end its pandemic-era bond purchases, a process known as “tapering,” by stepping away from a historic level of support for the economy. Since June 2020, the Fed has been buying $120B in monthly asset purchases, including $80B in Treasury bonds and $40B in mortgage-backed securities.

Bigger picture: As described in the last FOMC minutes, the “illustrative tapering path” would trim purchases by $15B per month beginning in November or December, bringing an end to the program by June or July. The reductions will also proceed at about twice the pace as the last time the Fed ended a bond buying program in 2014. Less is known about the remainder of the Fed’s balance sheet – which currently stands at $8.6T – as discussions have not even surfaced yet on when it would actually reduce those holdings (that likely won’t come until rate hikes are underway).

Investors will also be looking for comments on the surge in inflation, which is lasting longer than anticipated. Headline rates are running at twice the Fed’s 2% target, while rising prices, low business inventories and a growing labor shortage may mean the high pace of increases will continue for the foreseeable future. Meanwhile, the jobs market has taken on a different course than Fed officials have expected, with participation improving only slowly despite near-record numbers of openings.

Commentary: “Will they hold on to the transitory description of inflation? My best guess is they will, in order to keep their commitment to support the economic recovery until the economy is closer to full employment,” said Aneta Markowska, an economist at Jefferies. “If they were being intellectually honest they would probably drop it, but given what is happening in the market the Fed has to tread carefully.”

Hikes on horizon

While the market is sanguine about the Fed’s tapering, there’s a lot of questions on how Fed Chair Jay Powell will address the market pricing in rate hikes starting in the middle of next year. If he pushes back strongly, short-term yields could reverse in a hurry (the 2-year Treasury rate fell 5 basis points yesterday to 0.46%). Last week, the yield curve flattened with shorter-term rates shooting up more than longer-term rates as rate traders brought forward their expectations for policy tightening.

Snapshot: On Monday, the Reserve Bank of Australia scrapped its short-term rate target in the face of a huge move recently in three-year yields. The Bank of England and the Bank of Canada have changed their tones as well, shifting to more hawkish policy given inflation concerns and the recent rise at the short end of the curve. The ECB also fought back against market expectation of a rate hike last week, but investors believed the message was too weak and added to bets that it would soon raise rates.

With “tapering around the corner and the prospect of a rate rise towards the end of 2022, we are now witnessing sharp bouts of increase in the 2-year yield, raising the prospects of a bear flattening,” Jefferies added in a research note. “The last proper bear flattening cycle was witnessed in 2018, when 2-year bond yields steadily rose, while the yield curve flattened. Beyond that, we have witnessed only fleeting instances of a bear flattening post-GFC, lasting for an average of just 2 months.”

Go deeper: Even if central banks tighten policy sooner rather than later, the effects could fail to drag real yields higher, if the market assumes that it’s not enough to catch up with inflation. Furthermore, much of the inflation being felt in the economy is from transportation bottlenecks and supply shortages, so hiking rates may not help that front. What they could do is hit the brakes on the demand side, but depending on who you ask, that could risk damaging the economic recovery or prevent it from overheating.

Home flopping

Zillow (Z) is winding down its Zillow Offers iBuying Service after the real-estate fintech decided forecasting home prices is too unpredictable. The company’s Q3 results include a $304M writedown of inventory as a result of purchasing homes in Q3 at higher prices than its current estimates of future selling prices, while it expects to take an additional $240M-$265M of losses in Q4. It will sell its portfolio of roughly 7,000 homes over the next several quarters, which will also include a reduction of Zillow’s workforce by around 25%.

Market movement: Zillow shares closed down 10% on the news on Tuesday, and are off another 17% in premarket trading to $72. That’s down from last week’s peak of nearly $104, bringing losses over the three sessions to 30%.

“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility,” said Zillow Group (NASDAQ:ZG) co-founder and CEO Rich Barton.

More explaining: “We went into the business as a big swing on the bet that we could accurately predict the price of a home six months into the future, and what happened was… COVID happened,” he later told CNBC. The company also noted that market watchers shouldn’t interpret Zillow’s decision as a call of a top in the housing market, but it rather stemmed from higher-than-expected volatility. In fact, fundamentals of the housing market remain “quite strong,” according to Barton, who stressed that the firm will “wind down our inventory in an orderly way.”

Big win for Atlanta

The Braves have a reason to celebrate after winning the 2021 World Series, defeating the Houston Astros 7-0 on Tuesday night in Game 6. The victory at Minute Maid Park caps off one of the most spectacular late-season surges in baseball history as the team was still below .500 until Aug. 8. It’s also the Braves’ first title since 1995, which until now was the only championship by a major professional sports team in Atlanta history, barring soccer (the Atlanta United won the MLS Cup in 2018).

Quote: “We hit every problem, every bump you could possibly hit this year,” exclaimed star first baseman Freddie Freeman. “Injuries, every single kind of thing that could have happened, that could go wrong, went wrong, and we overcame every single one of those things.”

Interestingly enough, the Braves are one of only two publicly traded MLB teams (the other is the Toronto Blue Jays (NYSE:RCI)). In 1976, the Braves were purchased by media magnate Ted Turner, owner of superstation WTBS, to keep the team (one of his major programming staples) in Atlanta. Time Warner then inherited the team after purchasing Turner Broadcasting in 1996, but sold the group to Liberty Media for $400M in 2007. The company also includes Formula One (NASDAQ:FWONA) and Sirius XM (NASDAQ:LSXMA), though the Braves segment has traded on the Nasdaq as a tracking stock under ticker “BATRA” since 2016.

Why don’t more teams IPO? Most U.S. sports groups are owned by wealthy individuals who don’t want to deal with the public markets (the same goes for the league). Public ownership is also burdensome, especially for a team whose priority is to win games even at the expense of some profits (might be different for shareholders). Regulatory accountability and labor laws are also a problem that could be further complicated by director or proxy action, while for teams operating at a loss, it could prevent them from using a tax shield against earnings.

Today’s Economic Calendar
Auto Sales
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
9:45 PMI Composite Final
10:00 Factory Orders
10:00 ISM Service Index
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:30 PM Chairman Press Conference

Companies reporting earnings today »

What else is happening…

Avis Budget (NASDAQ:CAR) doubles after wild trading halts, short squeeze action.

Yahoo (NYSE:APO) exits China as new privacy law goes into effect.

McDonald’s (NYSE:MCD) begins running tests of McPlant menu.

Facebook (NASDAQ:FB) is shutting down its facial recognition program.

Bed Bath & Beyond (BBBY) jumps 85% on $1B buyback plans.

New vertical… Netflix (NASDAQ:NFLX) launches its first mobile games.

Activision Blizzard (NASDAQ:ATVI) delays two key titles: Overwatch 2 and Diablo IV.

CDC gives green light for first COVID vaccine for children.

Pfizer (NYSE:PFE) expects $65B in COVID vaccine sales in 2021/22.

Deere (NYSE:DE) strike stays on as workers reject second contract offer.


Good morning. Happy Tuesday.

The Asian/Pacific markets leaned down. South Korea, Malaysia and the Philippines did well; Japan, China, Hong Kong, Australia and Indonesia were weak. Europe, Africa and the Middle East currently lean up. Germany, the UAE, Finland, Hungary and Israel are up; the UK, Russia and Norway lean down. Futures in the States point towards a positive open for the cash market.

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

Stories/News from Seeking Alpha…

Shot in the arm

The profits Big Pharma is making from COVID-19 vaccines will be revealed this week as both Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) report Q3 earnings. Analysts are expecting the two companies (Pfizer today, Moderna tomorrow) to disclose a collective $18B in vaccine sales, a figure which is comparable to their last two quarters – combined. Last week, Johnson & Johnson (NYSE:JNJ) said it saw more than $500M in Q3 vaccine sales, nearly double the $264M it made in the first half.

Bigger picture: COVID-19 vaccine revenues are more important financially to Moderna, since the jab is its only commercially approved product. However, shares of the company slid yesterday after choosing to delay the filing of its Emergency Use Authorization request for use in the 6-11-year age group. It made the decision upon hearing that the FDA would need additional time to evaluate the data in adolescents aged 12 to 17, meaning a review for that age category is unlikely to be complete before Jan. 2022 (Pfizer’s vaccine was FDA-approved for kids last week).

Investors will also be on the lookout for comments on vaccine sales for Q4 and 2022, as well as production expectations for younger patients and coverage for more of the globe. Other COVID drugs are also bringing in billions, like Gilead Sciences’ (NASDAQ:GILD) Veklury antiviral treatment, which is administered to hospitalized patients (had sales of $1.9B in Q3). Merck (NYSE:MRK) also predicts its COVID-19 pill, called molnupiravir, could bring in up to $7B in sales next year if granted regulatory authorization.

Rosy outlook? “Starting the week of Nov. 8, the kids vaccination program will be fully up and running,” White House coronavirus response coordinator Jeff Zients said in a statement. The CDC is scheduled to meet today to assess approval for Pfizer-BioNTech’s (PFE, BNTX) vaccine for 5- to 11-year-olds, while the Biden administration has already begun transferring 15M doses to facilitate immunizations at pediatricians’ offices, pharmacies, hospitals and health centers. However, unlike a pledge from Johnson & Johnson, both Pfizer and Moderna have chosen to profit from COVID-19 vaccine sales (check out YTD performance of the three stocks).

Rivian revs up

Get ready for the next exciting EV maker to hit the street. Rivian Automotive (RIVN) plans to sell shares between $57 and $62 apiece, attracting a valuation in the low-$60-billions with its IPO, according to an updated regulatory filing. The highly-anticipated debut from the company backed by Amazon (AMZN) could arrive next week after a roadshow this week wraps up.

By the numbers: If Rivian were to be valued at $62M, it would roughly be on par with Stellantis (STLA) and bigger than Honda Motor (HMC), Ferrari (RACE), Lucid Group (LCID) and Fisker (FSR). Meanwhile, Nio (NIO) – with a market cap of $67B – and Ford (F) – at $66B – would not be far off. It also highlights the investor enthusiasm for electric vehicles (and IPOs) as a fundraising round in January valued Rivian at only $27.6B.

Rivian was founded in 2009 by RJ Scaringe, the same year he finished his doctorate in mechanical engineering at MIT. The EV maker originally set out to make a sports car, but pivoted to electric pickup trucks and SUVs due to their growing popularity among consumers. Over the past two years, the company has burned through cash (about $2B in 1H21 alone) to retool its factory and prepare for large scale production. Rivian hopes to launch three models by year’s end, including an electric pickup called the R1T (deliveries began in September), a midsize SUV called the R1S and an electric delivery truck designed and built for Amazon.

Analyst commentary: “The thinking – of course – is that pure play EV vendors, will ultimately come to dominate the automotive world. In 2014, they accounted for 15% of all BEVs (Battery-Powered Electric Vehicles) sold. Today, they account for 28%. However, even if they ultimately were to account for 50% of all EVs sold by 2030 – which may be aggressive – it remains difficult to justify their current valuations,” writes Bernstein analyst Toni Sacconaghi. He also notes that the 15 largest OEMs have a collective market cap of $1.2T, which is just ahead of the $1.1T market cap for pure play EV vendors like Tesla (NASDAQ:TSLA) which sell 1% of all cars today. (95 comments)

Not so fast

Just as Democrats appeared poised to resolve a months-long impasse over a $1.85T social spending bill, Sen. Joe Manchin is vocalizing his concerns again. He says that the package, which includes healthcare, education and climate priorities, needs to have “greater clarity” about the impact it will have on the country’s “national debt and our economy.” He also criticized Democrats for using “gimmicks” to hide the true cost of the plan and said more time is needed to assess potential negative consequences.

Quote: “I’m open to supporting a final bill that helps move our country forward, but I’m equally open to voting against a bill that hurts our country,” declared Manchin, who is a pivotal vote in an evenly split Senate.

If negotiations drag out, it will be blow to party leaders who had been hoping to pass the social safety net plan this week. It also puts President Biden’s economic agenda in jeopardy as the measure is linked to a related $1.2T infrastructure package that progressives have so far held up until a vote on the social spending bill is finalized. Manchin has castigated that stance, saying, “holding this [infrastructure] bill hostage is not going to work in getting my support for the reconciliation bill.”

Response: “Senator Manchin says he is prepared to support a Build Back Better plan that combats inflation, is fiscally responsible, and will create jobs. The plan the House is finalizing meets those tests – it is fully paid for, will reduce the deficit, and brings down costs for health care, child care, elder care, and housing,” White House Press Secretary Jen Psaki said in a statement. “Experts agree: Seventeen Nobel Prize-winning economists have said it will reduce inflation. As a result, we remain confident that the plan will gain Senator Manchin’s support.” (3 comments)

Satellite internet

Looking to get its broadband constellation off the ground, Amazon (AMZN) intends to launch its first satellites into low Earth orbit in the fourth quarter of 2022. The initiative, called Project Kuiper, aims to build a network of 3,236 satellites to provide high-speed internet to anywhere in the world. Kuiper satellites are likely to only add to the rivalry between Amazon and Blue Origin (BORGN) founder Jeff Bezos and SpaceX (SPACE) boss Elon Musk, who has already sent over 1,600 satellites into orbit under its Starlink (STRLK) constellation (beta service is currently available in 18 countries).

Bigger picture: Amazon made the announcement on its corporate blog, saying it sent an experimental license application for the KuiperSat-1 and KuiperSat-2 satellites to the FCC. The company will partner with ABL Space Systems to launch its satellites on ABL’s new RS1 rocket from the Cape Canaveral Space Force Station in Florida. Rajeev Badyal, Project Kuiper’s vice president of technology, also related that the satellites have tested well in lab settings, but only time will tell how they will perform in the real world.

“There is no substitute for on-orbit testing,” Badyal declared. “And we expect to learn a lot given the complexity and risk of operating in such a challenging environment.”

Race for global internet coverage: Facebook (FB) abandoned plans for Aquila in 2018, which aimed to deliver service via solar-powered drones, while Alphabet (GOOG, GOOGL) pulled the pin on Project Loon in January, a decade-old venture that planned to beam internet to Earth via giant balloons. The events have prompted companies to increasingly look to space to blanket the globe in connectivity, allowing them to reach the other half of the world’s population that doesn’t have Internet. While those projects face steeper initial costs and take longer to deploy, they might provide more consistency with longer lifetimes. (18 comments)

Today’s Economic Calendar
FOMC meeting begins
Auto Sales
8:55 Redbook Chain Store Sales

Companies reporting earnings today »

What else is happening…

Tesla (NASDAQ:TSLA) has not signed contract with Hertz (OTCPK:HTZZ) yet – Musk.

GlobalFoundries (NASDAQ:GFS) sold out of semiconductor capacity through 2023.

Dow Jones Industrial Average briefly tops 36,000 milestone.

EV stocks keep gaining as world leaders talk climate at COP26 summit.

Climate efforts… Goldman Sachs (NYSE:GS) signs onto Net Zero Banking Alliance.

BP (NYSE:BP) heads south after warning on ‘tight’ gas market this winter.

Meme revival as GameStop (NYSE:GME) gets boost from cryptic chairman tweet.

Zillow (NASDAQ:Z) seeks recovery from a pause in its home-flipping business.

Coca-Cola (KO) confirms $5.6B deal for sports drink maker BodyArmor.

Company makeover? DuPont (NYSE:DD) plans Rogers (NYSE:ROG) deal and alternatives.


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

The Asian/Pacific markets were split. Japan, India and Taiwan did well; Hong Kong, New Zealand, Malaysia and Indonesia were weak. Europe, Africa and the Middle East are currently mostly up. France, Turkey, Germany, UAE, Russia, Greece, Switzerland, Norway, Spain, Italy, Portugal, Austria and the Czech Republic are leading. Futures in the States point towards a positive open for the cash market.

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

Stories/News from Seeking Alpha…

Climate knockout or COPout?

There were mixed climate reviews coming out of the G20 meeting this weekend, with some citing breakthroughs such as a commitment to stop financing new coal-fired power plants overseas and others saying the communique offered little specifics. Clean energy investors are now eyeing the COP26, a U.N.-sponsored climate summit in Glasgow that will take place over the next two weeks. Complicating matters is a global energy crunch that has prompted China to turn to coal to avert power shortages, Europe to seek more Russian gas and the U.S. blaming the OPEC oil “cartel” for soaring gasoline prices.

Why is it important? The goal of the summit is to finalize the 2015 Paris Agreement, which aimed to limit the rise in average world temperatures to well below 2, preferably to 1.5 degrees Celsius compared with pre-industrial levels. However, that meeting left out concrete details on how to achieve that objective, as well as how countries report emissions, what standards are used and who is responsible for auditing the data. Carbon offset trading is another area that will be discussed, as well as rules governing that framework.

President Biden is heading into Glasgow with a half-a-trillion-dollar plan to cut greenhouse gas emissions, or what National Climate Advisor Gina McCarthy calls the “largest investment to combat the climate crisis in American history.” The current framework agreement is still pending congressional approval, however, with a $150B program aimed at pushing utilities to draw more power from clean energy sources under pressure from Sen. Joe Manchin. Countries and companies will also detail what they are doing independently of the Paris climate accords, including cutting methane emissions, as well as pledges for electric vehicles.

Thought bubble: Developing nations want wealthier countries like the U.S. to fork over more money to help ease the energy transition, saying it’s unfair to sacrifice for the good of the planet after America spent decades industrializing without any restrictions on its growth. India’s Foreign Affairs Minister Subrahmanyam Jaishankar is specifically looking for wealthier nations to raise $100B a year to help poorer countries, calling it “less than the money [that the] NFL is making from media rights.” The negotiations will ultimately boil down to questions of fairness and trust, as well as how much each nation will be able to commit given their economic resources.

Travel disruptions

Plans for air travelers were disrupted again this weekend as American Airlines (NASDAQ:AAL) scrubbed more than 1,900 flights due to adverse weather and labor shortages. The issues started on Thursday and Friday, when high winds shut down American’s busiest hub at Dallas/Fort Worth International Airport. The cancellations then snowballed, resulting in pilots and flight attendants not being in the right places for their flights.

Problems are getting worse: Spirit Airlines (NYSE:SAVE) canceled 2,800 flights over a 10-day period in September due to a number of factors, including bad weather and staff shortages (the affair ultimately cost the airline $50M). Last month, Southwest Airlines (NYSE:LUV) canceled abound 2,000 flights in a $75M loss that the airline blamed on thin staffing that made it difficult to recover after bad weather in Florida. It also triggers more concern about the upcoming holiday season, when increased traffic could cause further disruptions.

Airlines were banned from laying off workers during the pandemic as a condition of billions in federal pandemic relief, but that didn’t stop airlines from urging thousands of workers to retire early or take leaves of absence to conserve cash. Carriers are still working to rebuild their operations to catch up with demand that has surged since the summer, but getting off the ground is not proving easy, with fully packed schedules often getting delayed or canceled.

Commentary: “Airlines found they overcompensated in terms of the cut they made to their fleets, to their payroll counts,” noted Vik Krishnan, an aviation consultant at McKinsey & Co. “You can’t fly planes, if you don’t have people to unload the bags that are on them, or people to check you in, or people to help you board an airplane safely.”

‘Upgrade your sports drink’

Talks have been going on for some time, but Coca-Cola (NYSE:KO) today is set to buy full control of sports drink maker BodyArmor. Coke already took a 30% stake in the brand in 2018, adding a premium drink to its lineup that includes the Powerade label. The deal for the other 70% will have a price tag of $5.6B, valuing BodyArmor at an electro(lyte)fying $8B, sources told the WSJ.

Backdrop: BodyArmor was launched in 2011 by Lance Collins, the successful beverage entrepreneur who founded Fuze Beverage and NOS Energy Drink, as well as Mike Repole, co-founder of Energy Brands, vitaminwater, and Smartwater. In March 2013, Kobe Bryant purchased a large stake in the company (which the estate currently values at $400M) and Keurig Dr Pepper (NASDAQ:KDP) also has a 12.5% stake. BodyArmor’s products include sports drinks, alkaline water and caffeinated sports drinks, but none of them contain artificial sweeteners, colors or flavors

While PepsiCo-owned (NASDAQ:PEP) Gatorade still dominates the sports drink market, BodyArmor purchases have been climbing quickly and are even expected to generate about $1.4B in retail sales this year. According to Goldman Sachs analyst Bonnie Herzog, Gatorade accounted for 64% of sports drinks sales in the four weeks ended Oct. 9, compared to Coke’s Powerade, which represented 13%. However, BodyArmor has now taken the No. 2 spot, with 18% of the total market.

Go deeper: The BodyArmor transaction would be the largest brand acquisition in Coca-Cola’s history as CEO James Quincey pushes the corporation to become a “total beverage company.” The last big deal came in 2018, when Coke shelled out $5.1B for Costa Coffee to break its way into the coffee shop business. Another large Coke acquisition was its $4.1B purchase in 2007 of Glaceau, the company behind vitaminwater and smartwater brands.

Staley steps down

Reverberations of the Jeffrey Epstein scandal are still being felt in the capital markets as Barclays (BCS) CEO Jes Staley resigned overnight, ending a six year reign at the U.K.-based bank. It follows an investigation into Staley’s characterization to Barclays of his relationship with the convicted sex offender and the subsequent description of that relationship in Barclays’ response to the Financial Conduct Authority (FCA). Head of global markets, C.S. Venkatakrishnan (known as Venkat), will step into the top role with immediate effect, subject to regulatory approval.

Quote: “It should be noted that the investigation makes no findings that Mr. Staley saw, or was aware of, any of Mr. Epstein’s alleged crimes, which was the central question underpinning Barclays’ support for Mr. Staley following the arrest of Mr. Epstein in the summer of 2019,” Barclays said in a statement. BCS -1.7% premarket.

The Wall Street veteran, who has run Barclays since late 2015, has had some additional trouble with U.K. regulators. Back in 2018, the FCA fined him about $870K after it emerged that he had tried to identify a whistleblower at the bank. He later apologized and Barclays held back about $680K of his 2016 pay over the incident.

What it means: “Although detail is limited, it appears regulators believe there was a distinct lack of transparency over this [Epstein] relationship,” said Susannah Streeter, senior investment analyst at Hargreaves Lansdown. “It’s understood Mr. Staley will contest the conclusions, and clearly the board wants to distance Barclays from what could be a long drawn out process.” Staley’s departure is “very disappointing” as he has improved capital and profit, added Shore Capital analyst Gary Greenwood, but Venkatakrishnan is well respected and experienced.

Today’s Economic Calendar
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending

Companies reporting earnings today »

What else is happening…

U.S., EU agree to trade truce on steel, aluminum imports.

Deere (NYSE:DE) reaches tentative labor deal with striking workers.

Trump’s SPAC (NASDAQ:DWAC) media deal may have violated securities laws – NYT.

FDA authorizes Pfizer-BioNTech (PFE, BNTX) vaccine for children 5-11 years old.

Crypto miner hoarding fueled Bitcoin’s (BTC-USD) October rally?

Robinhood (NASDAQ:HOOD) revenue from Dogecoin (DOGE-USD) falls 86% in Q3.

FAANG may change, but Jefferies already has a broader Sweet 16.

Activist said to increase pressure on education publisher Pearson (NYSE:PSO).

XPeng’s (NYSE:XPEV) momentum continues in October; EV deliveries up 233% Y/Y

Canadian Pacific (NYSE:CP), Kansas City Southern (NYSE:KSU) file application with railroad regulator.


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