Before the Open (Nov 15-19)

Good morning. Happy Friday.

The Asian/Pacific markets leaned up. Japan, China, South Korea and Indonesia did well; Hong Kong, New Zealand and Thailand were weak. Europe, Africa and the Middle East are currently posting big losses. The UK, France, Germany, Poland, Russia, Greece, South Africa, Hungary, Spain, Italy, Portugal, Austria and the Czech Republic are down big. Futures in the States are split. S&P down, Nasdaq up.

————— My interview with —————

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

Stories/News from Seeking Alpha…

Policy divergence

Monetary policy has been front and center over the last few months amid questions about how economic trends coming out of the pandemic will influence the world’s most important central banks. Chief among them is inflation concerns, though other figures like industrial production and retail sales have also been big talking points. Lockdowns are not helping, with Germany following Austria’s lead in shuttering places where hospitals are overwhelmed as surging COVID cases spread across the continent.

Bigger picture: Traders are betting that the ECB will stick to its loose monetary policy despite the Federal Reserve and Bank of England indicating that they are going to raise rates to counter inflation. The U.S. economy has also surprised on the upside this year, while recent European data has disappointed, such as Germany’s latest industrial production and factory orders figures. “At a time when purchasing power is already being squeezed by higher energy and fuel bills, an undue tightening of financing conditions is not desirable, and would represent an unwarranted headwind for the recovery,” ECB President Christine Lagarde said earlier this week.

Meanwhile, a lot of the trading expectations have recently spilled over from the bond markets, to currency markets, with the euro falling sharply against the dollar. On Wednesday, the currency even fell to $1.13, and is still holding at that level, marking a low that was last seen 16 months ago. Against the pound, the euro is near levels not seen since the start of the pandemic and many traders are pricing in further near-term weakness.

Over in Japan: In another diverging trend, Tokyo is set to announce a record $490B spending package today (including direct cash payments) to cushion the economic blow from the pandemic. That bucks a recent stance adopted by the world’s other systemically significant central banks, which have been withdrawing crisis-mode stimulus measures (like the recent tapering decision by the Fed). It will also pile on more liabilities to Japan’s heavy debt load, which has reached 266% of its gross domestic product.


Talk on Apple’s (AAPL) car-development plans accelerated yesterday in a busy week for the EV sector. A report from Bloomberg suggested the company is now targeting a fully self-driving electric car launch in 2025, faster than the five- to seven-year timeline that some engineers had expected as recently as earlier this year. The ideal design for the car would feature no steering wheel or pedals, and in at least one mockup, passengers would face inward, toward each other. Shares of Apple closed up nearly 3% on Thursday at a new all-time high of $157.87.

Snapshot: The general consensus on the initiative is that Apple will seek out a manufacturing partner. Wedbush Securities thinks a strategic alliance could be announced next year with Hyundai (OTCPK:HYMTF), Volkswagen (OTCPK:VLKAF) or others, while a partnership in China could include XPeng (XPEV) or Nio (NIO). In terms of hardware, Taiwan Semiconductor (TSM) has been touted as a partner for autonomous chips, while Apple has held discussions on battery options with Contemporary Amperex Technology and BYD Company (OTCPK:BYDDF).

“When you stack Apple up against Tesla (TSLA) in terms of tech prowess, I think that they are probably closer than you think to where Tesla’s at today,” said Loup Ventures analyst Gene Munster. “AI, which is really the substance of autonomy – on that front, they’re doing really well. This is about as big an addressable market as you can get and Apple wants to be a participant.”

Getting serious about the future: Given the coming competition, more automakers are planning their next industry steps. On Thursday, CEO Jim Farley said Ford (F) plans to produce 600K EVs a year globally by the end of 2023, which is twice its original plan (think electric F150 Lightning, Mustang Mach-E and the planned electric Transit van). Ford and General Motors (GM) are also looking to get into the semiconductor business, a year after chip shortages upended their global factory output.

Build Back Better

The nonpartisan Congressional Budget Office is out with its estimate for President Biden’s Build Back Better Act. The $1.75T social spending measure is the second installment of the administration’s economic agenda after an infrastructure package passed earlier this week to update America’s roads, tunnels and bridges. Democrats hoped to pass the bill in the House on Thursday night, but an hours-long speech by Minority Leader Kevin McCarthy prompted them to postpone the vote until this morning.

CBO analysis: The federal agency found that the Build Back Better Act would contribute $367B to the deficit over 10 years, though that doesn’t include $207B in revenue which could result from spending $80B on tax enforcement efforts at the IRS. Adding in those potential gains, the bill’s 10-year deficit still totals $160B. The new figures added fresh impetus for Republicans to unite against the bill, with McCarthy calling it, “the single most reckless and irresponsible spending in the history of this country.”

On the other side of the aisle, the Biden administration said IRS spending would generate $480B (not $207B stated by the CBO), and would even reduce the total deficit by $112B over the next decade. That would mean the bill would be a net positive for the national debt and many Democrats appear willing to accept that perspective. Complicated matters is the support from centrists like Sen. Joe Manchin, who has flagged its hefty price tag, and only time will tell how things will play out. Democrats hope to pass the bill via a special legislative process called reconciliation, meaning the entire support of the party’s members would be needed in the evenly divided Senate.

What’s in the bill? Universal prekindergarten, capping child care expenses, negotiating lower prescription drug costs and expanding tax credits for reducing carbon emissions. It would also impose a new 15% minimum tax on large U.S.-based corporations, create a 1% tax on stock buybacks and raise taxes on U.S. companies’ foreign profits. However, the bill would leave the corporate tax rate at 21% after pressure from Sen. Kyrsten Sinema, while basic individual tax rates would stay unchanged for all but top earners.

Delivery drones

Walmart (WMT) has launched a new delivery service using autonomous drones after toying around with the technology for more than six years. Under a partnership with California-based Zipline, the nation’s largest retailer will be able to transport health and wellness products to its customers around Pea Ridge, Arkansas, who will use the Zipline app to place their orders. At full capacity, Zipline’s aircraft can service a 50-mile radius (nearly the size of the state of Connecticut) and Walmart hopes the platform can eventually make its products more widely accessible in the U.S.

Backdrop: Zipline began operating in 2016 and has completed over 200K commercial deliveries of over 4.5M units of medical supplies, serving more than 20M people across multiple countries. After staffers pack the delivery into the underbelly of a drone, the aircraft takes off on a launchpad and eventually drops the box (tethered to a mini-parachute) into a customer’s back or front yard. Walmart expects the deliveries to take 30 to 45 minutes.

“Drones can help break down barriers to on-demand access by reaching historically difficult delivery locations, such as rural communities,” according to a spokeswoman.

Note: Walmart has been testing other initiatives to turn its last mile delivery services autonomous, including using driverless trucks to deliver goods between locations.

Today’s Economic Calendar
10:00 Quarterly Services Report
10:45 Fed’s Waller: “U.S. Economic Outlook”
12:15 PM Fed’s Clarida: “Perspectives on Global Monetary Policy Coordination, Cooperation, and Correlation”
1:00 PM Baker-Hughes Rig Count

Companies reporting earnings today »

What else is happening…

Investors buy Macy’s (NYSE:M) and Kohl’s (NYSE:KSS) after retail earnings.

Unilever (NYSE:UL) sells Lipton, Pukka and other tea brands for $5B.

Berkshire-backed (BRK.B) Paytm takes a tumble in India trading debut.

Epic Games calls Apple (NASDAQ:AAPL) battle ‘most important fight’ for digital rights.

Trouble brewing? Alibaba (NYSE:BABA) posts big earnings miss, soft guidance.

CVS (NYSE:CVS) rebounds after company unveils new retail strategy.

U.S. to acquire 10M doses of Pfizer’s (NYSE:PFE) COVID pill Paxlovid.

Canada to authorize COVID-19 vaccine for children – Reuters.


Good morning. Happy Thursday.

The Asian/Pacific markets closed mostly down. Taiwan did well, but China, Hong Kong, South Korea, India and Indonesia posted losses. Europe, Africa and the Middle East lean down. Turkey, Greece, Hungary and Israel are up; Poland, Russia, Finland, Norway, Spain, Italy, Portugal, Austria and Saudi Arabia are down. Futures in the States point towards a positive open for the cash market.

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

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

Stories/News from Seeking Alpha…

Tapping reserves

The Biden administration is turning to some of the world’s largest oil consuming nations to lower global prices after OPEC+ snubbed several requests to increase crude production. Reuters reports that the coordinated effort could include China, India, South Korea and Japan, and would involve releasing national crude stockpiles at a time when prices are rising at the pump. The U.S. and allies have coordinated strategic petroleum reserve releases before, with the last big effort coming during the 2011 war in OPEC member Libya.

Quote: “We’re talking about the symbolism of the largest consumers of the world sending a message to OPEC that ‘you’ve got to change your behavior,'” a source told Reuters. Crude futures (CL1:COM) -0.7% to $77.03/bbl, after dropping nearly 3% on Wednesday.

Reports also suggest that President Biden asked the Federal Trade Commission to probe possible criminal conduct in the U.S. gasoline market. He specifically pointed to gasoline prices that rose about 3% from a month earlier, even as the price of unfinished gasoline was down more than 5%. “This unexplained large gap is well above the pre-pandemic average,” Biden said in a letter to FTC Chair Lina Khan. “Meanwhile, the largest oil-and-gas companies in America are generating significant profits off higher energy prices.”

What is the SPR? The U.S. created the Strategic Petroleum Reserve in 1975 after the Arab Oil Embargo led to a spike in gasoline prices that scarred the U.S. economy. The reserve currently holds enough oil to meet U.S. demand for more than a month, including about 606M barrels in dozens of caverns across the Louisiana and Texas coasts, as well as small heating oil and gasoline reserves in the U.S. Northeast. Presidents have authorized several emergency sales from the SPR (Gulf War in 1991, Katrina in 2005 and Libyan Civil War in 2011), but oil swaps take place more frequently, with the last exchange happening after Hurricane Ida in September. (63 comments)

Vaccine mandate

The Occupational Safety and Health Administration (OSHA) has been told to suspend enforcement of the Biden administration’s COVID vaccine mandate for private businesses with 100 or more employees, after a federal appeals court upheld a stay on the order. The rules would have required firms to develop a roster of vaccinated and unvaccinated employees by Dec. 5, and compelled the companies to ensure unvaxxed workers wear masks at the workplace and submit to weekly testing as of Jan. 4. In terms of execution, the OSHA regulation would have been enforced through company record-keeping and some in-person inspections (with penalties of up to $13,653 for each reported violation) and covered 84M workers nationwide.

How did we get here? Many legal challenges to the mandate popped up across the country, resulting in a judicial lottery to consolidate the lawsuits before a single appeals court. Under the unusual system mandated by Congress, officials placed the name of each of the judicial circuits with an active challenge on a ping pong ball that was placed in a solid wood raffle drum. John Nichols, clerk on the DC-based Judicial Panel on Multidistrict Litigation, then drew a ball, which ended up having the name of the 6th Circuit Court of Appeals in Cincinnati.

Critics of the mandate were hoping for a strong conservative court, like the 5th Circuit, while proponents were pushing for an appeals court with a more liberal stance such as the 9th Circuit. More than twice as many judges have been appointed by Republican presidents than Democrats to the 6th Circuit, with a three-judge panel (yet to be determined) set to hear the first case. To note, the order being discussed by the court does not include other vaccine mandates, like the one on healthcare providers that receive Medicaid and Medicare payments, or the directive on employees of federal contractors.

Next steps: “Whatever the 6th Circuit decides, I think this [vaccine-or-test mandate] is going to be resolved at the Supreme Court,” declared Dan Meyer, managing partner at law firm Tully Rinckey. (11 comments)

The Chobani Way

It’s been a red-hot year for IPOs and the party is not stopping. Chobani just filed for a listing on the Nasdaq Exchange under the symbol “CHO,” becoming the latest food company to hit public markets. There’s been mixed reaction from investors in the space, with oat milk rival Oatly (OTLY) slumping 50% since its May debut, while shares of coconut water maker Vita Coco (COCO) have climbed 24% since last month’s IPO.

By the numbers: Chobani revenues grew 5.2% to $1.4B in the fiscal year that ended on December 26, 2020, though its net loss triple over that time frame to $58.7M (as it invested back into the company). However, for the nine-month period that ended on September 25, the firm’s net sales growth outpaced its widening net loss, suggesting that its investments may have been successful. The majority of Chobani’s sales come from North America, with international markets accounting for roughly a tenth of its revenue.

Founded in 2005, Chobani has been credited for popularizing Greek yogurt, though it has recently been expanding into other product categories. Those include launches of oat milk, coffee creamer, ready-to-drink coffee and plant-based probiotic beverage product lines.

Differentiation outlook: “We challenge the old, staid and conventional status quo represented by our legacy competitors by creating food that is delicious, natural, nutritious and accessible. Throughout our history, we have paired our innovative mindset with deliberate investments in people, plants and our sales and distribution platform (our 3Ps) that, coupled with unparalleled in-house execution capabilities, allow us to innovate rapidly and build scale across categories seamlessly. As a result, we believe we can move from concept to shelf more quickly than our competition and, importantly, with better quality, more natural and nutritious food options.” (17 comments)

Right to repair

For anyone who has ever owned an iPhone and needed it repaired, their options have been to either go to an Apple Store, or to a repair shop which Apple (AAPL) has given access to the specific parts and specialized tools necessary to complete any gadget fixes. That’s all about to change, with a new Self Service Repair program that will launch in early 2022.

Snapshot: The program will initially provide individual consumers with access to “genuine Apple parts and tools” for the mobile-phone displays, batteries and cameras in the iPhone 12 and iPhone 13 lineups. Apple will follow that up with parts, supplies and manuals for Mac computers using the company’s M1 processor. The program will be offered first in the United States, and to other countries over the next year.

Giving consumers the ability to do their own product repairs is a major change of policy for Apple. In addition to being highly secretive about its product pipeline, the company has often gone out of its way to make it as difficult as possible for people to make product repairs in their own home. Few examples of that have been more visible than Apple’s use of a “pentalobe” screw that Apple has used on iPhones and Macs since 2009, and for which a screwdriver or replacement screw is close to impossible to find at any hardware store.

Pressure is building: It’s a big U-turn for the iPhone maker, which was fighting a shareholder proposal in support of “right to repair” as recently as last month. However, the Biden administration unveiled an executive action in the summer, ordering the Federal Trade Commission to address “unfair anti-competitive restrictions on third-party repair or self-repair of items.” Environmental advocates separately filed a shareholder resolution in September, stating that the high costs of repairs often prompt consumers to buy new products, resulting in a buildup of electronic waste. (30 comments)

Today’s Economic Calendar
7:30 Fed’s Bostic Speech
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
9:30 Fed’s William Speech
10:00 E-Commerce Retail Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
2:00 PM Fed’s Evans Speech
3:30 PM Fed’s Daly Speech
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening…

Rivian’s (NASDAQ:RIVN) winning streak ends, Lucid (NASDAQ:LCID) drops.

Despite outlook, Target (NYSE:TGT) margins disappoint investors.

Strike ends as Deere (NYSE:DE) union workers approve latest deal.

Chevron (NYSE:CVX), Exxon (NYSE:XOM) busy buyers in Gulf of Mexico oil lease.

Cisco (NASDAQ:CSCO) slips 6% amid downbeat quarterly revenue guidance.

Lowe’s (NYSE:LOW): Macro trends will continue to fuel home improvement.

SEC probes Cassava (NASDAQ:SAVA), developer of experimental Alzheimer’s drug.

Moderna (NASDAQ:MRNA) seeks to widen COVID booster eligibility for all adults.

Nvidia (NASDAQ:NVDA) rises on strong gaming, remains committed to Arm purchase.

Growth worries… Beyond Meat (NASDAQ:BYND) CEO under fire for product execution.


Good morning. Happy Wednesday.

The Asian/Pacific markets leaned down. China did well, but Japan, South Korea, India, Australia and New Zealand were weak. Europe, Africa and the Middle East are mixed and little changed. Denmark, Turkey and Greece are up; the UAE and Norway are down. Futures in the States point towards a flat open for the cash market.

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

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

Stories/News from Seeking Alpha…

Let’s go racing

Boogity, boogity, boogity… An electric car rally has taken hold of the market over the last week and the sector is showing little signs of slowing down. Traders are screaming future, especially after the COP26, though others (that likely missed out on the rally) are saying the fundamentals don’t match up and FOMO forces are at play. The U.S. infrastructure package is another reason for an EV party, with $12B dedicated to accelerating the use of electric vehicles, as well as potential EV tax credits on the way in the upcoming Build Back Better bill.

Stats: Just days after going public, Rivian Automotive’s (RIVN) market capitalization zoomed past that of Volkswagen (OTCPK:VWAGY), which is the second-largest automaker in the world by volume. Putting it in perspective, VW manufactured 9.3M vehicles last year, compared to the 150 electric trucks produced by Rivian. Rival Lucid Motors’ (LCID) market value also closed in on GM’s (GM) and topped Ford’s (F) on Tuesday, underscoring investors’ appetite for EV makers and the hunt for the next Tesla (TSLA).

“There’s still plenty of buying interest because I still think ultimately investors are viewing this as a phase and viewing pullbacks as an opportunity,” said Craig Erlam, senior market economist at OANDA. “If you ask me where the share price is going to be six months from now, 12 months from now? I’d say it’s more likely to be 20% higher than 20% lower.”

Day in the sun: Sono Group (SEV) is due to start trading this morning, with an IPO that is attracting attention. The German solar-powered car startup, which priced shares at $15, is seeking a valuation of more than $1B and also checks the box of being pre-revenue. Sono already has 16K reservations for its Sion solar electric vehicle, which it believes will be the next big wave in e-mobility, and hopes to take the solar concept to trucks, trailers and even buses. (71 comments)

Debt limit

Now that the infrastructure package has passed Congress, attention is turning to priorities like the budget bill and debt ceiling. Treasury Secretary Janet Yellen is warning that the Treasury could be left with insufficient resources to keep financing the government beyond Dec. 15, while a shutdown could come as soon as Dec. 3. Democrats are also aiming to approve a $1.75T spending measure to expand the social safety net and deal with threats posed by climate change.

How did we get here? Congress approved an extension of the nation’s debt limit in October, and since then, the Treasury has been using so-called extraordinary measures to help fund the government. However, the new infrastructure bill will demand fresh payment obligations from the Treasury, requiring it to transfer $118B to the Highway Trust Fund within one month of the law’s enactment, which would be on Dec. 15. That’s still two weeks later than initial estimates, given more up-to-date projections of federal spending and revenues.

“To ensure the full faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible,” Yellen wrote to Congressional leaders. She has also called for a bipartisan vote to address the ceiling, but suggested in recent weeks that Democrats – if they need to – should consider raising the limit on their own through reconciliation.

Alarm bells: U.S. sovereign debt is generally considered to be the safest and most liquid to own in the world, and all kinds of financial market instruments and processes have been pegged to the nearly $21T Treasury market. If that were to be disrupted, U.S. credibility could be damaged throughout the world and prompt some catastrophic effects. Yellen has previously warned that a default would “likely precipitate a historic financial crisis that would compound the damage of the continuing public health emergency, as well as triggering a spike in interest rates, a steep drop in stock prices and other financial turmoil.” (2 comments)

Boosters for all

Reports suggest that the FDA is poised to approve booster doses of Pfizer-BioNTech’s (PFE, BNTX) COVID-19 vaccine for all adults as early as tomorrow, while the CDC’s Advisory Committee on Immunization Practices has scheduled a meeting on Friday to discuss the booster as well. It was only a week ago that Pfizer asked the FDA to allow third shots for all individuals aged 18 years and older, with data showing that vaccine effectiveness wanes over time and following the rise of Delta variant.

Bigger picture: Some cities and states, like California, Colorado, and New York City, have gotten ahead of the FDA, making boosters available to all adults. As coronavirus cases surge in Minnesota, the state is also ready to allow adults to get booster shots by the end of the week if the federal government doesn’t approve them first. According to the CDC, only 15.7% of the total U.S. population have received a booster, including 36% of Americans 65 and older.

“I believe it’s extremely important for people to get boosters, and I am hoping very soon we will see a situation where there won’t be any confusion about who should and should not get boosters,” White House chief medical advisor Dr. Anthony Fauci declared. “In my opinion boosters are ultimately going to become a part of the standard regimen and not just a bonus.”

Go deeper: Yesterday, Pfizer submitted FDA application for emergency approval of its COVID-19 treatment pill, which could help reduce the strain that has been put on hospital systems. In clinical trials, people at increased risk of developing severe COVID were given the pill, along with a common HIV drug, which reduced hospitalization and death by 89% when taken within three days of the onset of symptoms. The Biden administration is set to unveil plans this week to procure 10M courses of the pill, named PAXLOVID, which is priced at approximately $500 per treatment. (17 comments)

Remote work revolution

As working from home becomes part of the future, and not just a passing trend, countries are passing new labor laws to adapt to the development. The shift away from the office started in the years prior to the pandemic, but COVID-19 seems to have cemented those arrangements into place. According to a survey by Owl Labs and Global Workplace Analytics, 1 in 4 workers would even quit their job if they could no longer work remotely after the pandemic (an additional 19% were undecided).

Enter Portugal: New rules passed in the country will see companies face fines for contacting workers outside of their normal working hours. Employers will also have to help pay for costs incurred by remote working, such as electricity and internet bills, but can write them off as a business expense. With regards to privacy, firms will also be forbidden from monitoring their employees while they work from home, though many of the laws will not apply to companies with fewer than ten employees.

Going further… Barring a few exceptions, parents of young children will have the right to work from home without having to arrange it in advance with their employers (until their child turns eight years old). Measures to tackle loneliness are also included in the remote working rules, with companies charged with organizing face-to-face meetings at least every two months. “Telework can be a game changer if we profit from the advantages and reduce the disadvantages,” said Portugal’s Minister of Labor Ana Mendes Godinho, adding that the new environment could attract foreign remote workers and digital nomads.

Could it happen in America? Portugal isn’t the only country modernizing its labor laws, with France, Spain, Belgium, Italy, India and Argentina all implementing work requirements like the “right to disconnect.” However, the U.S. has historically put a focus on productivity, profits and the bottom line above everything else, according to Julie Kashen of The Century Foundation, and “I just don’t see it as a frontier right now.” For example, paid family and medical leave has struggled to get through Congress for decades, and was most recently removed from President Biden’s American Families Plan, as Democrats tried to pare costs of the $1.75T social spending package due to opposition from Sen. Joe Manchin and Kyrsten Sinema (former President Donald Trump also sought a paid leave proposal in his budget). (55 comments)

Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Housing Starts and Permits
9:10 Fed’s Williams Speech
10:30 EIA Petroleum Inventories
11:20 Fed’s Mester: “Planning for Surprises, Learning from Crises”
12:40 PM Fed’s Daly Speech
12:40 PM Fed’s Waller: “Planning for Surprises, Learning from Crises”
12:40 PM Fed’s Mester: “Planning for Surprises, Learning from Crises”
1:00 PM Results of $23B, 20-Year Bond Auction
4:05 PM Fed’s Evans: Economic Conditions and Monetary Policy
4:10 PM Fed’s Bostic Speech

Companies reporting earnings today »

What else is happening…

Economic rebound? October retail sales nearly double expectations.

Peloton (NASDAQ:PTON) soars after capital raise clears near-term overhang.

Baltic Dry Index plunges to five-month low as shipping rates retreat.

Shoppers return… Walmart (WMT) falls despite dazzling comparable sales.

Home Depot (HD) rises as customers up their spending habits.

German regulator suspends certification of Nord Stream 2 pipeline.

U.K. confirms in-depth review of Nvidia’s (NASDAQ:NVDA) planned Arm acquisition.

Qualcomm (NASDAQ:QCOM) executives tout diversification strategy at Investor Day.

Twitter (NYSE:TWTR) CFO comments keeps Bitcoin (BTC-USD) under pressure.


Good morning. Happy Tuesday.

The Asian/Pacific markets were mixed. Hong Kong and Indonesia did well; India, Australia and New Zealand were weak. Europe, Africa and the Middle East lean up. Germany, the UAE, Greece, South Africa, Finland, Norway and Austria are up; Russia and Portugal are down. Futures in the States point towards a flat open for the cash market.

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

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

Stories/News from Seeking Alpha…

Retail on the radar

Investors are hoping to get a better assessment of the U.S. economy today amid a flurry of data on the retail sector. Walmart (WMT) will kick off a busy week of earnings before the market opens, giving some insight into what executives have to say about the all-important holiday season. Home Depot (HD) will also report on same-store sales, while commenting on how it’s countering supply chain disruptions to keep up with strong building demand.

Rest of the story: Providing the best picture on the macro landscape, the U.S. Census Bureau is scheduled to release its retail sales report at 8:30 a.m. ET. A strong print could signal that the economy is back on track, with expectations of a 1.2% gain or more (compared to 0.7% in September). The figure likely benefited from rising gasoline prices and early holiday shopping, though a miss could prompt renewed fears of stagflation.

“What it tells us is whether there’s momentum that was restored at the end of the third quarter and heading into the fourth quarter, we’re in pretty good shape,” said Barclays chief U.S. economist Michael Gapen. “It would be another data point that confirms the soft patch story rather than the slowdown.”

Outlook: The October retail sales report will be one of the earliest clues about the readings for fourth-quarter gross domestic product after the figure dwindled to a 2% pace in Q3. It also follows a strong jobs report with 531K payrolls added in October. However, inflation is an area that has received a lot of attention recently, and the retail sales number could highlight further price pressures, bringing forward expectations for a coming rate hike.

Virtual summit

During a meeting on Monday night that lasted more than three hours, President Biden and China’s Xi Jinping looked to reduce the tensions that have marked the relationship since January, while opening the road for more dialogue. No major resolutions were produced from the gathering, but that was expected, as the White House said the discussion would center around “ways to manage the competition between the U.S. and China responsibly.” Other attendees at the meeting included Treasury Secretary Janet Yellen, Secretary of State Antony Blinken and National Security Advisor Jake Sullivan.

Quotes: “Our responsibility as leaders of China and the United States is to ensure that the competition between our countries does not veer into conflict, whether intended or unintended,” Biden said to his counterpart via video, while Xi responded in a similar fashion. “China and the United States should respect each other, coexist in peace and pursue win-win cooperation. I stand ready to work with you, Mr. President, to build consensus, take active steps and move China-U.S. relations forward in a positive direction.”

While many topics were discussed, such as human rights, climate change and Taiwan, investors honed in to what the world’s biggest economies said about trade and the business landscape. Biden underscored the importance of China fulfilling its Phase 1 trade deal commitments, after other concerns were flagged last week, like the impact of China’s “extremely robust and very effective industrial policies on our ability to grow and thrive.” The White House also painted Biden coming into the summit with a strong hand after the signing of a major infrastructure bill that “will boost America’s competitiveness with China.”

Analyst commentary: “Stability is the name of the game here,” said Ben Harburg, managing partner at MSA Capital. “Critical to establishing that structure is placement of guardrails to reduce these risks of the economic relationship and global stability. American and Chinese businesses are looking for a more clear framework under which they are able to operate independently of the political dynamic.”

Crypto slide

Bitcoin (BTC-USD) tumbled as much as 10% overnight to below $60,000 amid broad losses in the crypto sector. In fact, the global crypto market cap fell 7% in the past 24 hours to $2.8T, according to tracker CoinGecko. Possible catalysts?

New tax reporting requirements: “We’ve seen the U.S. infrastructure bill get signed, which has initiated a selloff from traders who are concerned about regulation and taxation [for digital currencies],” noted Hayden Hughes, CEO of crypto strategy platform Alpha Impact.

Another broad crackdown: China is studying the option of levying punitive power prices for companies that are involved in cryptocurrency mining, National Development and Reform Commission spokeswoman Meng Wei announced at a press conference.

Trading patterns: It “would be unusual to keep moving up without corrections,” said Vijay Ayyar of crypto exchange Luno, adding that investors are seeing a “healthy pullback” after a sustained rally.

Sector news: Riot Blockchain (NASDAQ:RIOT) slid 8% AH after announcing financial results for Q3. The SEC also issued a subpoena for Marathon Digital’s (NASDAQ:MARA) mining facility in Montana.

Go deeper: The retreat comes a week after Bitcoin notched a fresh record high of $68,990.90 on Nov. 10, which also helped other cryptos, like Ether (ETH-USD), reach all-time highs.

Shedding Dutch identity

Royal Dutch Shell (RDS.A, RDS.B) has unveiled plans to streamline its structure, discarding its dual-share system in favor of a single line of shares. It would also shift its headquarters from the Netherlands to the U.K., aligning Shell’s tax residence within its country of incorporation.

Snapshot: While the shuffle was described as a simplification of corporate structure – giving it more autonomy over things like dividends and share buybacks – there can be a broader move at play. Back in May, a Dutch court ruled that the company must reduce its carbon emissions by 45% by 2030 (compared with 2019 levels), essentially setting corporate strategy for the company. While Shell has said the ruling wasn’t the reason for its choice to relocate, it may have helped in the decision-making process.

Shell has also been under pressure from activist investor Third Point, which feels that the energy giant should split into separate fossil fuels and renewables businesses to pave the way for a cleaner future. While Shell has faced calls to simplify its structure for years, the latest decision could be a signal that Shell will have to do more in the coming years with regards to the energy transition.

Future moniker: The relocation would result in a name change to just “Shell,” dropping the “Royal Dutch” designation it has held for more than 130 years. Shell’s plan would also mark the first major change to its structure since 2005, when it unified its two legacy businesses under a single parent company. The proposal will be put to shareholders at a general meeting on Dec. 10.

Today’s Economic Calendar
8:30 Retail Sales
8:30 Import/Export Prices
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 Business Inventories
10:00 NAHB Housing Market Index
12:00 PM Fed’s Bostic: “Racism and the Economy: Focus on Financial Services event”
2:55 PM Fed’s Harker Speech
3:30 PM Fed’s Daly Speech
4:00 PM Treasury International Capital

Companies reporting earnings today »

What else is happening…

Morgan Stanley says avoid U.S. stocks and bonds in 2022.

Permian oil production poised to reach record monthly high – EIA.

Republican-sponsored marijuana bill formally introduced in the House.

Lucid (NASDAQ:LCID) tops 13K vehicle reservations, confirms production plans.

AMC (NYSE:AMC) to accept Shiba Inu (SHIB-USD) for payment within 120 days.

Casper Sleep (NYSE:CSPR) taken private by Durational Capital Management.

Costs on the rise… Tyson Foods (NYSE:TSN) latest to raise meat prices.

Oatly (NASDAQ:OTLY) sinks after guidance comes in below expectations.

Burger King parent (NYSE:QSR) downs sandwich chain Firehouse Subs for $1B.

13F: Berkshire (NYSE:BRK.B) adds Royalty Pharma (NASDAQ:RPRX), exits Merck (NYSE:MRK).


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

The Asian/Pacific markets were mixed. Japan, South Korea and Taiwan did well; Malaysia and Indonesia were weak. Europe, Africa and the Middle East are mostly quiet. Turkey is up big; France, Russia, Italy and the Czech Republic are up. Saudi Arabia is down. Futures in the States point towards a positive moderate gap up open for the cash market.

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

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

Stories/News from Seeking Alpha…

Over the finish line

In a ceremony that will take place at the White House later today, President Biden will sign the $1T bipartisan infrastructure bill that finally passed in Congress after months of negotiations. The five-year spending package will be financed by tapping unspent COVID relief aid, Medicare rebates and unemployment insurance halted by some states, as well as petroleum reserve sales and 5G spectrum auctions. On Sunday night, Biden named Mitch Landrieu, a former mayor of New Orleans and a former lieutenant governor of Louisiana, as the infrastructure coordinator, who will be tasked with overseeing the “largest infrastructure investment in generations.” Jefferies cites five infrastructure stocks to buy now.

Snapshot: The role is similar to the one Biden was assigned to as vice president during the first year of the Obama administration. He oversaw spending from the 2009 Recovery Act, which included $787B to stimulate the economy after the global financial crisis.

“I made it a point every day to stay on top of how exactly the money was spent, what projects were being built, what projects were not being built and how it was functioning,” Biden said in a statement. “We owe it to the American people to make sure the money in this infrastructure plan and the Build Back Better plan – which, God willing, we’re going to be able to still finish – will be able to be used for purposes it was intended.” The package is separate from a separate social “infrastructure” spending measure, which is being held up in the Senate over its price tag.

Highlights from the current bill: $110B was earmarked for repairing the nation’s aging highways, bridges and roads. Another $65B will be allocated for internet access, which would improve services for rural areas, low-income families and tribal communities. A further $65B would be spent on modernizing the electric grid, while boosting carbon capture technologies and environmentally friendly energy sources. The package also features $55B for water and wastewater infrastructure, $39B for public transit, $25B for airports and around $12B for accelerating the use of electric vehicles. Infrastructure ETFs like PAVE are building steam.

Fourth wave

Coronavirus cases are on the rise in Europe again, with almost 2M infections reported in the last week. That’s the most in the region since the pandemic began, according to the World Health Organization, with almost 27,000 deaths reported, or more than half of all last week’s COVID-19 deaths globally. The alarming numbers have seen Belgium and Norway reimpose some COVID restrictions, Austria institute a lockdown for the unvaccinated and Germany call for an extended state of emergency.

Bigger picture: U.S. states should look at Europe and take it as “a sign that the U.S. might still see resurgences, as well,” said Tom Wenseleers, evolutionary biologist and biostatistician at KU Leuven, a university in Belgium. Hospitals across Minnesota are already operating at “100% capacity” and have issued a plea for the public’s help as COVID cases hit an all-time high. Concerns are also growing as the worst of winter sets in, when most people gather and socialize indoors.

Meanwhile, a federal appeals court in New Orleans has halted the Biden administration’s vaccine and testing requirements for private businesses. Calling the requirement a “mandate,” the court said the rule “grossly exceeds OSHA’s statutory authority,” though it is not clear whether the 5th Circuit will determine the fate of the order. The Biden administration has asked that it hold off on a ruling until a judicial lottery can take place this week, which will consolidate several challenges before a single appeals court.

Under fire: Last month, the White House called on all WTO members to support an intellectual property waiver for COVID-19 vaccines, a year after India and South Africa pushed for a similar proposal. Pfizer (NYSE:PFE), which has delivered around 2B shots of its vaccine (expected to generate $36B for the company in 2021), is fighting the stance, calling IP rights the “blood of the private sector.” It also wouldn’t solve supply problems in the short term or allow for quality checks, according to the company, though waiver proponents say that is not the case, and the current framework is leading to global vaccine inequality.

COP26 conclusion

After two weeks of talks, nearly 200 countries struck an agreement to ramp up efforts to fight global warming. Supporters say Saturday’s COP26 agreement in Scotland signals new determination among the world’s governments to shift away from fossil fuels, though activists cautioned that the deal fell well short of the breakthrough needed to avert eventual climate catastrophe. They specifically pointed to the lack of enforcement mechanisms, relying only on good faith to follow the rules as best they can.

Backdrop: A late change at the insistence of China and India (who say they need more time to develop industry) watered down a pledge to “phase out” coal power, instead committing to “phase down” coal. However, the language marked the first time that coal or fossil fuels were mentioned – and implicitly blamed – in a United Nations climate change pact. China and the U.S., the world’s two biggest carbon emitters, also released a joint declaration pledging to cooperate in fighting climate change, but critics say the deal is mostly symbolic.

While an agreement was separately reached on a broad framework that many business leaders hope will encourage cross-border trading of carbon credits among companies, activists had hoped for more formal rules for governments. More than 100 countries further agreed to cut methane levels, and the agreement includes a reference to methane for the first time – but there’s nothing binding.

Communique: “We have made progress on the three objectives we set at the start of COP26,” said European Commission President Ursula von der Leyen. “First, to get commitments to cut emissions to keep within reach the global warming limit of 1.5 degrees. Second, to reach the target of $100B per year of climate finance to developing and vulnerable countries. And third, to get agreement on the Paris rulebook. This gives us confidence that we can provide a safe and prosperous space for humanity on this planet. But there will be no time to relax: there is still hard work ahead.”

Biden meets Xi

The clock is ticking down for a high-profile meeting between President Biden and China’s Xi Jinping, which will take place in the U.S. tonight and Tuesday morning in Beijing. While the two leaders have spoken twice by phone since Biden took office in January, today’s gathering will resemble a formal bilateral meeting, with leaders on both sides surrounded by high-level aides. The meeting will also take place virtually as Xi has not left China since the pandemic began in March 2020.

Likely topics: Climate change, nuclear nonproliferation, human rights, COVID-19, Hong Kong and Taiwan, intellectual property, cybersecurity and the 2022 Winter Olympics.

For investors, any signals that bilateral trade ties are improving may help bolster sentiment. China wants the U.S. to remove Trump-era tariffs, but the Biden administration is expected to keep them mostly in place until Beijing makes good on its promise to uphold several purchase agreements. China has been running far behind its promises made in a “Phase 1” deal signed in 2020 – to boost purchases of U.S. goods by $200B – and has also not fully met promises to improve IP protections and market access for American agriculture and financial services.

Moreover, the U.S. will raise issues that go beyond the Phase 1 commitments, like China’s industrial subsidies for its state-owned companies. Infrastructure could be another hot talking point as China continues to develop its Belt and Road Initiative, which aims to build a series of projects across Asia to Europe. G7 nations have recently sought to counter the effort by launching an international alliance called Build Back Better World, or BBB3.

Outlook: Due to an increasingly fractious relationship, officials on both sides have played down expectations for any concrete conclusions. In other words, while specific issues aren’t going to be resolved in the meeting, the U.S. wants to put “guardrails” on the relationship so it doesn’t deteriorate. Over the last few months, sweeping crackdowns have also been seen across many of China’s economic sectors, showing investors that Xi is willing to force through painful reforms at all costs and making his hold on the Communist Party look even stronger.

Today’s Economic Calendar
8:30 Empire State Mfg Survey

Companies reporting earnings today »

What else is happening…

Elon Musk is up to $6.9B worth of TSLA stock sales; trolls Bernie Sanders.

Taproot, Bitcoin’s (BTC-USD) biggest upgrade in four years, goes live.

Merck (NYSE:MRK) potential animal health spin could be next after J&J split up.

Boeing (NYSE:BA) 737 MAX changes win favor from China regulator – Reuters.

Fresh legalization move… Cannabis stocks lead weekly healthcare gainers.

Deere (NYSE:DE) reaches tentative agreement with union to end four-week strike.

Southwest (NYSE:LUV) boosts worker incentives to avert holiday travel disruptions.

Amazon (AMZN) workers in New York withdraw petition for union vote – AP.

White House to nix Intel (NASDAQ:INTC) plan on boosting chip production in China.

Nvidia (NASDAQ:NVDA) set to get in-depth U.K. probe of Arm deal this week.


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