Daily Market Report | Jan. 05, 2021

U.S. Stocks Edge Higher Ahead of Georgia Elections – Wall Street Journal, 1/5/2021

  • U.S. stocks edged higher Tuesday as investors await the outcome of two electoral races in Georgia that will determine control of the Senate.
  • Money managers are closely monitoring the Georgia Senate runoff elections Tuesday.
  • If Democrats win both seats, that could make it easier for President-elect Joe Biden’s administration to pass new legislation.
  • Additional fiscal stimulus would be more likely if Democrats control Congress and the White House, and that could potentially give stocks another leg up, investors have said.
  • But the prospect of tax increases and more regulation is also weighing on markets, they cautioned.
  • In the near term, investors also remain focused on the coronavirus pandemic, with elevated infection levels and the likelihood of restrictions on social and business activity potentially setting back the global economic recovery.
  • A highly contagious strain of Covid-19 recently discovered in the U.K. has also been found in New York, the state’s governor said Monday.
  • Hong Kong’s Hang Seng rose 0.6%. The Hong Kong-listed shares of China’s three largest telecommunications companies surged after the New York Stock Exchange reversed its decision to delist them.
  • The previous plan followed a U.S. government order, signed by President Trump in November, that prohibits Americans from investing in a list of companies the U.S. government says supply and support China’s military, intelligence and security services.

Coronavirus Live Updates: Reported New U.S. Cases Fall, as Hospitalizations Jump to Another Record – Wall Street Journal, 1/5/2021

  • The U.S. reported fewer new Covid-19 infections than a day earlier, as hospitalizations again hit a record high.
  • The nation logged more than 180,000 newly reported cases for Monday, according to data compiled by Johns Hopkins University, down from 210,479 a day earlier. The number of newly reported cases tends to be lower at the beginning of the week, as fewer people are tested over the weekend, but a gap in some states’ reporting on New Year’s Day led to a backlog in cases that has skewed national numbers in recent days.
  • Hospitalizations in the U.S. jumped to 128,210 for Monday, according to the Covid Tracking Project, which has reported numbers higher than 125,000 every day but one since Dec. 30.
  • The project also reported a record 23,435 people in intensive care units for Monday.
  • Much of Europe is now eyeing the prospect of further lockdowns and other measures to slow the spread of Covid-19 as the U.K.’s struggle to contain a more easily-transmissible variant of the virus sharpened concerns among governments and policy advisers that the pandemic could worsen without further action.
  • Both England and Scotland entered new lockdowns Tuesday, shutting schools and requiring people to remain at home where possible.
  • Additional measures are due to be announced in Northern Ireland, while the Welsh government introduced its own lockdown last month. The new measures came as the U.K. as a whole recorded nearly 59,000 new infections on Monday.
  • Regional leaders in Germany, meanwhile, appear close to agreeing that shops, restaurants and other businesses should remain closed until the end of the month. Further measures might be announced once they conclude their meeting later Tuesday.
  • With many businesses now forced to close their doors and also weighing the impact of the U.K.’s exit from the European Union, the British government Tuesday unveiled a new support package worth 4.6 billion pounds, equivalent to $6.2 billion, to help them through the lockdown.

Highly Contagious Covid-19 Strain Has Been Found in New York State, Gov. Cuomo Says – Wall Street Journal, 1/4/21

  • The highly contagious strain of Covid-19 recently discovered in the United Kingdom has reached New York, Gov. Andrew Cuomo said Monday.
  • The identification of the new strain in New York came as Covid-19 hospitalizations and positivity rates continue to climb around the state, mostly in areas north of the Hudson Valley.
  • Another 170 New Yorkers died on Sunday as a result of Covid-19, and 8,251 people around the state were hospitalized, the Democratic governor said. That is the highest hospitalization figure since May 7, state data show.
  • He said he would order further shutdowns only if data showed hospitals would be overrun.
  • New York currently bans gatherings of more than 10 people around the state and prohibits indoor dining in New York City.

In sudden U-turn, NYSE scraps plan to delist three Chinese telecom firms – Reuters, 1/5/21

  • The New York Stock Exchange said it no longer intends to delist three Chinese telecom giants – a shock reversal of an announcement made only last week and deepening confusion over a U.S. crackdown on firms said to be linked to China’s military.
  • The bourse, which had planned to delist the companies before Jan. 11, said in a brief statement it had made the decision “in light of further consultation with relevant regulatory authorities.”
  • Hong Kong-traded shares in the state-backed firms, China Mobile, China Telecom Corp and China Unicom Hong Kong, surged following the news.
  • Some analysts said they believe the exchange had been told by the Office of Foreign Assets Control, which is responsible for enforcing sanctions, that delistings were unnecessary even though investment in related companies was banned.

Auto Sales in 2020 Expected to Hit Lowest Point in Nearly a Decade – Wall Street Journal, 1/5/2021

  • The U.S. auto industry is expected to report its lowest yearly sales tally in nearly a decade Tuesday, as the fallout from the Covid-19 crisis in 2020 upended a record run for the American auto sector.
  • Analysts from several research firms expect U.S. vehicle sales to total 14.4 million to 14.6 million in 2020, which would be down roughly 15% from a year earlier and the lowest level since at least 2012.
  • Some dealers say 2020 was among their most profitable years ever, due in part to better pricing and surprisingly strong used-car sales.
  • Used cars—a key profit center for dealers—have been hot, partly because the shortage of new vehicles has steered more customers to the preowned lot.

General Motors U.S. auto sales rise 4.8% in fourth quarter – Reuters, 1/5/21

  • General Motors on Tuesday reported a 4.8% rise in U.S. auto sales for the fourth quarter, boosted by demand for new vehicles during the COVID-19 pandemic.
  • The U.S. automaker said its sales rose to 771,323 units from 735,909 units a year ago.

Qualcomm Chief Executive Steve Mollenkopf to Step Down – Wall Street Journal, 1/5/2021

  • Qualcomm said Chief Executive Steve Mollenkopf would step down in June after 26 years with the mobile-phone chip giant.
  • The company named Cristiano Amon as Mr. Mollenkopf’s successor, as Qualcomm puts a period of legal struggles behind it and aims to capitalize on rising demand for superfast 5G phones.
  • Mr. Mollenkopf is to remain an adviser to the company for a period after Mr. Amon succeeds him, the company said.
  • The departing CEO said it was the right time to make the change, with questions about the company’s business model behind it and large new opportunities before it.

Amazon, Berkshire Hathaway, JPMorgan End Health-Care Venture Haven – Wall Street Journal, 1/5/2021

  • A health-care venture launched with great fanfare by three of the world’s most prominent companies— Amazon.com, Berkshire Hathaway and JPMorgan Chase — and their chief executives is folding about three years after its founding.
  • The joint venture, which was announced in 2018 with expectations high enough to push down major insurers’ shares, will cease operations in February without having achieved those aims.
  • Haven’s transformative ambitions proved too difficult to achieve, according to people familiar with the matter. Its shutdown attests to the challenges of making sweeping changes to the U.S. health-care system and of bringing innovations to hundreds of thousands of employees around the country working at different companies, the people said.

Drugmakers kick off 2021 with 500 U.S. price hikes – Reuters, 1/5/21

  • Drugmakers including Abbvie and Bristol Myers Squibb raised U.S. list prices on more than 500 drugs to kick off 2021, according to an analysis by health care research firm 46brooklyn.
  • They include more than 300 price increases from companies like Pfizer and GlaxoSmithKline reported by Reuters late last week.
  • Nearly all the increases were below 10%, and the median hike was 4.8%, down slightly from last year, 46brooklyn said.
  • Abbvie raised prices on around 40 drugs including a 7.4% hike on rheumatoid arthritis treatment Humira, the world’s top-selling drug.
  • Bristol Myers hiked prices on around a dozen drugs, including cancer drugs Revlimid and Opdivo by 4.5 percent and 1.5 percent, respectively. It hiked the price of blood thinner Eliquis by 6 percent.

McDonald’s wants a bite of crispy chicken market with new sandwiches – Reuters, 1/5/21

  • McDonald’s is hoping 2021 is the year it cracks the crispy chicken sandwich by rolling out three different versions in the United States, as it takes on chains such as Restaurant Brands International’s Popeyes for a share of the growing market.
  • The world’s biggest burger chain confirmed to Reuters it plans to launch its crispy chicken sandwich in “classic”, “deluxe” and “spicy” versions on Feb. 24.
  • All will contain a new crispy white meat chicken fillet served with crinkle-cut pickles on a toasted, buttered potato roll.
  • At least two dozen restaurant chains launched new or improved chicken sandwiches in 2020 even as the coronavirus pandemic disrupted supplies, workers and operations, trade publication Nation’s Restaurant News said.

CoinDesk Buys TradeBlock, Joining Rush for Bitcoin Analytics – Wall Street Journal, 1/5/2021

  • CoinDesk, a bitcoin-focused media company, has acquired analytics company TradeBlock, in a bid to capitalize on demand for data-driven products in the burgeoning cryptocurrency industry.
  • Terms of the deal weren’t disclosed. CoinDesk is owned by Digital Currency Group, or DCG, which had been a minority investor in TradeBlock. DCG also owns Grayscale Investments, which sponsors the bitcoin trust.
  • The TradeBlock deal illustrates how important data and indexes are becoming to the industry.
  • The price of bitcoin has nearly quintupled since the beginning of 2020, setting a new high above $34,000 Sunday, driven by a wave of investors looking to ride its momentum.
  • The renewed interest has spurred demand for more sophisticated ways to track and trade cryptocurrencies.

Saudi Arabia, Russia Reach Compromise on OPEC-Plus Production Plan – Wall Street Journal, 1/5/2021

  • Saudi Arabia and Russia reached a compromise over oil policy among the world’s biggest producers, agreeing to keep production in check through February and then start ramping back up again in March, according to officials familiar with negotiations.
  • The two sides failed to agree to a deal on Monday and are set to complete the compromise later Tuesday, the people said, in a scheduled meeting between members of the Saudi-led Organization of the Petroleum Exporting Countries and a Russian-led contingent of big oil producers.
  • Russia was initially opposed to a rollover of the current cuts, fearing U.S. producers would fill the gap in any demand growth and take market share.
  • Meanwhile, Saudi Arabia and most other producers wanted current output restrictions extended, people familiar with their view said.

US ECONOMY & POLITICS

U.S. manufacturing sector activity rises to nearly 2-1/2-year high – ISM – Reuters, 1/5/2021

  • U.S. manufacturing activity rose to its highest level in nearly 2-1/2 years in December likely as spiraling new COVID-19 infections pulled demand away from services towards goods.
  • The Institute for Supply Management (ISM) said on Tuesday its index of national factory activity rebounded to a reading of 60.7 last month. That was the highest level since August 2018 and followed 57.5 in November.
  • But some of the surprise rebound in the ISM index was due to an increase in the survey’s measure of supplier deliveries to a reading of 67.6 last month from 61.7 in November.
  • The ISM’s forward-looking new orders sub-index rose to a reading of 67.9 last month from 65.1 in November.
  • The ISM’s manufacturing employment gauge rebounded to 51.5 from a reading of 48.4 in November.
  • The survey’s prices paid index jumped to a reading of 77.6 last month, the highest since May 2018, from 65.4 in November. That raises the risk of higher inflation this year, though high unemployment could limit price pressures.

Georgians Vote in Runoff Races That Will Determine Senate Control – Wall Street Journal, 1/5/2021

  • Georgia voters take to the polls Tuesday for two Senate runoffs that will determine which party controls the chamber, an outcome that could curb or expand the scope of President-elect Joe Biden’s legislative agenda.
  • More than 3 million votes have already been cast in early in-person voting and mail-in ballots underscoring high interest in the two races, which have drawn unprecedented campaign spending and national attention to the Peach State.
  • It isn’t clear when election results will be available after the polls close on Election Day, as election workers in Georgia’s 159 counties process the day’s votes as well as absentee and early-voting ballots.
  • Since 1988, Republicans have also won every statewide runoff in Georgia except one, in 1998, as Democratic turnout declined more steeply than that of Republicans for the second election, according to a nonpartisan report on the state’s history of runoffs.

EUROPE & WORLD

Britain Locks Down as New Covid-19 Variant Spreads – Wall Street Journal, 1/5/2021

  • British Prime Minister Boris Johnson began a national lockdown Monday, ordering the British population to stay home until mid-February amid spiraling infection rates caused by a new variant of the coronavirus.
  • As of Monday evening, schools and nonessential shops shut across England and people were told to only leave their homes if necessary.
  • The imposition of a third national lockdown came after the government’s chief medical officers warned the more-contagious strain was spreading quickly across the country and that some hospitals risked being overwhelmed within three weeks if new restrictions weren’t put in place.
  • The number of people testing positive for Covid-19 doubled over the past week to 366,000 as of Monday. Hospitalization numbers have risen 30% in a week. The number of deaths in the week rose by a quarter to 4,228.
  • Amid a bottleneck in supply, Britain is looking to get more vaccine to more people by lengthening the amount of time between the first and second doses, hoping to give more people some immunity by giving more people one shot before they get a second.
  • Some experts question whether data back this approach. Pfizer said there was no data to prove that a single dose of its vaccine offered protection after 21 days.

Airbus beat 560-plane delivery goal for 2020 – sources – Reuters, 1/5/2021

  • Airbus delivered more than 560 aircraft in 2020, according to tracking data and airline industry sources, putting it on course to beat arch-rival Boeing to be the world’s largest planemaker for a second consecutive year.
  • The European aerospace group reached an informal target of 560 handovers, based on numbers that remain subject to auditing, the sources added.
  • Airbus, which is expected to announce 2020 orders and deliveries in the coming days, declined to comment ahead of their formal publication.
  • Total Airbus deliveries are expected to have fallen by about a third this year, due to the impact of the COVID-19 pandemic on air travel and airlines.

Factmonster – TODAY in HISTORY

  • Henry Ford introduced the $5-a-day minimum wage. (1914)
  • President Nixon ordered the development of the space shuttle. (1972)

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