Daily Market Report | Jan. 04, 2021

U.S. Stocks Slip to Start 2021 – Wall Street Journal, 1/4/2021

  • U.S. stocks wobbled on the first trading day of the year, dragged down by losses across everything from manufacturers to beverage makers.
  • Investors are starting off the new year fixated on the same issue that dominated markets for much of 2020: the coronavirus pandemic.
  • Although money managers acknowledge the pandemic is far from over, many are holding out hope that economic activity will be able to pick up later this year.
  • Still, analysts warn that in the near-term, many companies still look vulnerable to financial pressures.
  • Investors also said they were reassured by newly released data on the health of the manufacturing sector.
  • Factories in Asia and Europe increased their output as 2020 drew to a close, according to surveys of purchasing managers that showed strong rises in activity during December.
  • Among European equities, British gaming company Entain soared 28% after it confirmed a takeover bid from MGM Resorts International. The offer values the company at £8.09 billion, equivalent to $11.06 billion.
  • Most major stock benchmarks in the Asia-Pacific region advanced. South Korea’s Kospi Composite led gains, rising 2.5%.
  • China’s Shanghai Composite gained 0.9%, even after a private survey showed China’s manufacturing activity moderated in December due to weak demand for the country’s exports.

Coronavirus Live Updates: U.S. Covid-19 Hospitalizations Hit Record – Wall Street Journal, 1/4/2021

  • The number of newly reported Covid-19 cases in the U.S. was down from a day earlier, but the number hospitalized with the disease hit a record.
  • The nation reported more than 210,000 new cases for Sunday, according to data compiled by Johns Hopkins University.
  • That was down from the previous day’s reported 297,491, which included data backlogs from states that didn’t report numbers for New Year’s Day. The holiday may still be affecting some reporting.
  • Hospitalizations in the U.S. hit a record 125,544 on Sunday—exceeding 125,000 for the fourth time in five days—according to the Covid Tracking Project, with 23,231 people in intensive care.
  • European governments are extending lockdowns and other measures to contain rising Covid-19 infections, with the U.K. accounting for a large and growing proportion of the new cases even as it rolls out the new vaccine developed by the University of Oxford and AstraZeneca.
  • The U.K. recorded nearly 55,000 new cases on Sunday, despite a fall in testing levels immediately after the New Year holiday.
  • Fears are growing that infections will rise further in the coming days as authorities warn that tighter lockdown measures may be required to slow the spread of the virus, which has been driven in part by a new, more easily transmissible variant first identified in the southeast of England.
  • Scotland’s leader, First Minister Nicola Sturgeon, on Monday announced a new, stricter lockdown that will take effect from midnight, backed by a legal requirement for people to stay home except for essential reasons.
  • In England, Prime Minister Boris Johnson has said more measures might be needed to slow the virus’s spread there, but on Monday said he aimed to keep primary schools open for as long as possible.
  • Germany’s Health Minister Jens Spahn told German television over the weekend that it was likely authorities would agree to extend restrictions to slow infections when regional leaders are scheduled to meet on Tuesday.
  • Norway ushered in new measures on Sunday, including a ban on serving alcohol in restaurants and bars and curbs on household mixing.
  • France reported more than 12,000 new infections on Sunday, far above the government’s target of keeping new case numbers below 5,000. Greece has tightened restrictions, closing hair salons and other businesses for a week, beginning Sunday.
  • Japanese Prime Minister Yoshihide Suga said he was considering declaring a state of emergency in Tokyo and surrounding areas as reported new cases of Covid-19 continue to rise.

Moderna raises 2021 vaccine output forecast to at least 600 million doses – Reuters, 1/4/2021

  • Moderna said on Monday it would produce at least 600 million doses of its COVID-19 vaccine in 2021, up by 100 million doses from its previous forecast, as the United States continues to roll-out the vaccine.
  • The company was working to invest and hire in order to deliver up to 1 billion doses this, the higher end of its production forecast, it said.
  • Moderna said it has so far supplied about 18 million doses to U.S. government as part of a deal for 200 million doses. It has also signed a deal with the Canadian government for 40 million doses.

Elon Musk Steers Tesla to Record Deliveries – Wall Street Journal, 1/4/2021

  • Tesla fell just shy of its goal of delivering at least half a million vehicles after the Covid-19 outbreak temporarily closed the company’s lone U.S. car plant.
  • The electric-car maker Saturday said it delivered a record 499,550 vehicles globally last year, up from roughly 367,500 the previous year. Analysts on average expected 493,000 Tesla deliveries in 2020. Tesla said it produced 509,737 vehicles last year.
  • Tesla ended the year with 180,570 deliveries in the final quarter, a record topping the 139,593 vehicles that went to customers in the previous three-month period.
  • Tesla said it delivered a combined 442,511 Model 3s and Model Ys last year and a combined 57,039 Model S luxury sedans and Model X SUVs.

MGM Makes $11 Billion Offer for Ladbrokes Owner Entain – Wall Street Journal, 1/4/2021

  • MGM Resorts International is seeking to buy British gaming company Entain, in the latest move by a casino operator to double down on the red-hot online-gambling business.
  • Entain, which owns the British gambling brand Ladbrokes, said Monday that it has received an £8.09 billion takeover proposal, equivalent to $11.06 billion, but said that the offer significantly undervalues the company.
  • MGM’s bid has the financial backing from its largest shareholder, IAC/InterActiveCorp, according to people familiar with the matter, and comes after an earlier roughly $10 billion all-cash overture for Ladbrokes was rebuffed.

Roku Nears Deal to Buy Rights to Quibi’s Content – Wall Street Journal, 1/3/2021

  • Quibi is in advanced talks to sell its content catalog to Roku, according to people familiar with the matter, as the short-form streaming service winds down its operations following an unsuccessful run.
  • Quibi, which was founded by the movie mogul Jeffrey Katzenberg, raised $1.75 billion with an ambitious plan to develop high-end content for mobile phones.
  • But the service, which launched in April, never gained traction and Quibi said in October that it was shutting down.
  • Under the terms the companies have discussed, Roku would acquire rights to Quibi’s library, the people familiar with the matter said. Financial terms of the proposed deal couldn’t be learned. The deal talks could still fall apart.

ViacomCBS Strikes Distribution Deal With Hulu – Wall Street Journal, 1/3/2021

  • ViacomCBS said Monday it has reached a distribution agreement with Walt Disney’s Hulu that puts many of its most popular cable channels on the live-TV video-streaming service.
  • The deal adds 14 cable networks from ViacomCBS to Hulu’s live-TV option, including Comedy Central, MTV and children-friendly channel Nickelodeon. The Paramount Network, home to hit show “Yellowstone” will also be added to Hulu + Live TV.
  • Before its merger with Viacom, CBS had a distribution agreement with Hulu that put its broadcast network on the live-TV service, along with channels including Pop TV, the CW and the Smithsonian Channel.

Google employees form workers’ union in United States – Reuters, 1/4/2021

  • More than 200 Google employees in the United States have formed a workers’ union, the elected leaders of the union wrote in a New York Times opinion piece on Monday.
  • The “Alphabet Workers Union” aims to ensure that employees work at a fair wage, without fear of abuse, retaliation or discrimination, the union heads wrote here.
  • Google has been under from the U.S. labor regulator, which has accused the company of unlawfully questioning several workers who were then terminated for protesting against company policies and trying to organize a union.
  • Google has said it was confident it acted legally.

US ECONOMY & POLITICS

Construction spending increases strongly in November – Reuters, 1/4/2021

  • U.S. construction spending rose solidly in November, boosted by a robust housing market amid historically low mortgage rates.
  • The Commerce Department said on Monday that construction spending increased 0.9% in November. Data for October was revised higher to show construction outlays accelerating 1.6% instead of 1.3% as previously reported.
  • Construction spending increased 3.8% on a year-on-year basis in November.
  • Spending on private construction projects jumped 1.2%, fueled by investment in homebuilding amid record-low mortgage rates and a pandemic-driven migration to suburbs and low-density areas. Spending on residential projects increased 2.7%.
  • But outlays on nonresidential construction like gas and oil well drilling fell 0.8% in November.

U.S. final manufacturing PMI ends 2020 at six-year high: IHS Markit – Reuters, 1/4/2021

  • U.S. manufacturing activity picked up at its briskest pace in more than six years in December, extending a recovery in the factory sector that has spurred the strongest pricing environment for goods producers since 2011 as the coronavirus pandemic upends supply chain networks.
  • IHS Markit said its manufacturing PMI climbed to 57.1 in December from 56.7 in November. The index also improved from its preliminary – or “flash” – reading in mid-December of 56.5, with a reading above 50 signaling expansion in activity.
  • With output moderating to 58.3 last month from 59.2 in November, the headline index’s improvement was driven largely by a strong pricing environment, IHS Markit said. Its output price index rose to its highest since May 2011.
  • Still, IHS Markit’s final manufacturing purchasing managers’ survey of a rocky 2020, released on Monday, showed the sector’s rebound was uneven.
  • Consumer goods makers saw weaker order flow as COVID-19 infections surged and limited consumer spending, while producers of machinery and equipment noted strong demand in a potential sign of improving business investment, said Chris Williamson, Chief Business Economist at IHS Markit.

Senate Overrides Trump’s Veto of NDAA Defense Bill – Wall Street Journal, 1/1/21

  • The Senate voted to override President Trump’s veto of a $740.5 billion defense bill, with many Republicans joining Democrats to deliver a rebuke to Mr. Trump in the final days of his presidency and for the first time pass into law legislation he had blocked.
  • Mr. Trump has objected to several provisions in this year’s NDAA.
  • He has criticized it for including measures that would strip military bases of names honoring Confederate military leaders and regulate troop withdrawals he has sought in Afghanistan and Germany.
  • The Senate voted 81-13 to override the veto, exceeding the two-thirds supermajority required. The action follows the House’s 322-87 override on Monday, and the bill now becomes law.

Pelosi Wins Fourth Term as House Speaker – Wall Street Journal, 1/3/21

  • Nancy Pelosi won her fourth term as House speaker on Sunday, showing in the first vote of the new session of Congress how her narrow majority will make it difficult for House Democrats to pass legislation in the new Congress.
  • The 80-year-old California Democrat, who has led her party in the chamber since 2003, won in a 216-209 vote between her and Minority Leader Kevin McCarthy (R., Calif.), with five Democrats voting present or for someone besides the speaker.
  • To win the speakership, Mrs. Pelosi had to carry a majority of those present and voting by name.
  • Democrats have 222 seats to Republicans’ 211 because one race in New York is still in dispute, and a seat in Louisiana is vacant because Republican Rep.-elect Luke Letlow died on Tuesday from complications of Covid-19.

USS Nimitz to Stay in Middle East to Counter Iran Threat on Anniversary – Wall Street Journal, 1/3/21

  • The Pentagon’s acting chief abruptly reversed course, sending an aircraft carrier to the Middle East to counter threats posed by Iran, days after directing it to leave the region over the advice of top military advisers.
  • Acting Secretary of Defense Chris Miller said in a statement Sunday evening that he had directed the USS Nimitz to the Middle East, three days after ordering that it be sent home.
  • The statement didn’t say how long the carrier would remain in the region.
  • Fears are rising that Tehran or its proxies may retaliate around the first anniversary of the killing of Maj. Gen. Qassem Soleimani, the head of Iran’s powerful Islamic Revolutionary Guard Corps, and Iraqi paramilitary commander Abu Mahdi al-Mohandes. They were hit by a U.S. drone strike while traveling on Baghdad’s airport road on Jan. 3, 2019.

EUROPE & WORLD

Factories bounce back from COVID-19 hit, tighter controls cloud outlook – Reuters, 1/4/2021

  • Manufacturers across Europe ended 2020 on a high while Asian factory activity expanded moderately thanks to robust demand in regional giant China, surveys showed, but the prospect of tougher coronavirus curbs clouded the outlook for the recovery.
  • IHS Markit’s final euro zone Manufacturing Purchasing Managers’ Index (PMI) rose to 55.2 in December from November’s 53.8, although that was below the initial 55.5 “flash” estimate.
  • An index measuring output, which feeds into a composite PMI due on Wednesday that is seen as a good guide to economic health, rose to 56.3 from 55.3.
  • Germany was again the bloc’s driving force and in contrast to the dominant service industry – which has been particularly badly impacted by lockdown measures to tackle the coronavirus – factories in the region have mostly remained open.
  • Britain’s PMI bounced to a three-year high of 57.5, but that surge was likely in large part due to factories rushing to complete orders before the UK’s transition period on its way to leaving the European Union ended.
  • Manufacturing activity expanded in Japan, South Korea and Taiwan, according to PMI surveys, the latest indication manufacturers in Asia continue to bounce back from the damage caused by the COVID-19 pandemic last year.
  • But a slowdown in China’s factory activity growth underscored the challenges. China’s Caixin/Markit PMI fell in December to 53.0 – its lowest level in three months – but stayed well above the 50 level.
  • Elsewhere, output stabilised in Japan for the first time in two years, while India’s factory sector ended a rough 2020 on a stronger note as manufacturers boosted production to meet rising demand.

Fiat Chrysler, PSA Shareholders Vote on Trans-Atlantic Tie-Up – Wall Street Journal, 1/4/2021

  • PSA Group shareholders approved the car company’s merger with rival Fiat Chrysler Automobiles at a meeting Monday, a step critical to moving the trans-Atlantic tie-up into its final stages.
  • For more than a year, the two auto makers have been working through the details of the combination, which when completed would create a global auto-making colossus, selling 8.7 million vehicles annually—more than General Motors Co.
  • The two are aiming to complete the merger early this year and plan to call the combined company Stellantis NV.
  • The combination is expected to produce savings—$6.1 billion annually by the companies’ projections—as well as help the two auto makers navigate increasingly stringent emissions regulations and invest in new technologies such as electric vehicles.

China says it will take action against U.S. delisting of its telecom firms – Reuters, 1/3/2021

  • China will take “necessary measures” to safeguard the interests of its companies after the New York Stock Exchange began delisting three Chinese telecom firms that Washington says have military ties, the country’s commerce ministry said on Saturday.
  • The NYSE said on Thursday that it would delist China Mobile, China Unicom and China Telecom following President Donald Trump’s move in November to bar U.S. investment in 31 firms that Washington says are owned or controlled by the Chinese military.
  • “This kind of abuse of national security and state power to suppress Chinese firms does not comply with market rules and violates market logic,” the Chinese Ministry of Commerce said in a statement.
  • While the ministry said it will take action to protect its firms, it also called on the United States to meet China half-way and put bilateral trade relations back on track.

Jack Ma’s disappearing act fuels speculation about billionaire’s whereabouts – Reuters, 1/4/21

  • Alibaba founder Jack Ma’s absence from public view in the past two months, including missing the final episode of a TV show on which he was to appear as a judge, has fueled social media speculation over his whereabouts amid a Chinese regulatory clampdown on his sprawling business empire.
  • China’s highest-profile entrepreneur has not appeared in a public setting since a late October forum in Shanghai where he blasted China’s regulatory system in a speech that put him on a collision course with officials, resulting in the suspension of a $37 billion IPO of Alibaba’s Ant Group fintech arm.
  • The Financial Times reported on Friday that Ma was replaced as a judge in the final episode in November of a game show for entrepreneurs called Africa’s Business Heroes.
  • While news coverage of Ma’s absence from public view triggered speculation on Twitter, which is blocked in China, it was not a significant trending topic on social media in mainland China, where sensitive topics are subject to censorship.

Factmonster – TODAY in HISTORY

  • Dr. William W. Grant of Davenport, Iowa, performed what is thought to be the first appendectomy. (1885)
  • During the Korean War, North Korean and Communist Chinese forces captured the city of Seoul. (1951)
  • President Johnson outlined his “Great Society” in his State of the Union address. (1965)

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Historical performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. Any economic forecasts set forth may not develop as predicted.

All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Material presented is excerpts derived from third party content and you may need a subscription to access the full the content. The views and opinions expressed are those of the authors and do not necessarily reflect the views of Pence Wealth Management or LPL Financial.

Prior to making any investment decision please consult your financial advisor regarding your specific situation.

Follow us on Facebook

Recent Tweets

Categories

Subscribe to Our Blog | Newsletter

Please complete to receive our insights and newsletters.