Daily Market Report | Jan. 13, 2021

U.S. Stocks Wobble Ahead of Impeachment Vote – Wall Street Journal, 1/13/2021

  • U.S. stocks wobbled Wednesday ahead of a vote by lawmakers on impeaching President Trump during his final week in office.
  • House lawmakers plan to vote Wednesday on impeaching the president for the second time, just days before he is due to leave office. While the political rancor has weighed on market sentiment in recent days, most money managers are looking past the developments in Washington to focus on the prospects for additional fiscal stimulus.
  • Stocks have drifted lower this week after notching record highs in early January as investors weighed the prospect of fresh government spending against political turmoil in Washington and still rising Covid-19 cases.
  • Energy and banking are among the best performers so far in the new year as investors bet on companies that fared poorly in 2020 and are likely to benefit as the economy recovers.
  • U.S. inflation data out Wednesday showed that consumer prices increased only moderately last month, reflecting weak demand for a range of goods and services.
  • Some economists expect inflation to pick up the pace as the economy grows faster later this year.
  • The Federal Reserve’s beige book report, due at 2 p.m. ET, will offer the latest collection of business anecdotes across Fed districts, offering insights into how companies view the economy’s prospects.
  • In corporate news, shares of Intel gained 7.4% after the chip giant said it ousted Chief Executive Bob Swan after activist hedge fund Third Point urged sweeping changes at the company.
  • A selloff in U.S. government bonds eased late Tuesday following strong demand for an auction of new 10-year notes.
  • On Wednesday, the yield on the 10-year Treasury note edged down to 1.115%, from 1.136% on Tuesday.

Coronavirus Live Updates: U.S. Deaths Set Single-Day Record – Wall Street Journal, 1/13/2021

  • The U.S. reported its highest daily number of deaths from Covid-19, and newly reported cases again exceeded 200,000.
  • More than 215,000 new cases were reported for Tuesday, the eight consecutive day above 200,000, according to Johns Hopkins.
  • More than 4,300 people died from the disease in the U.S. on Tuesday—a single-day record, according to data compiled by Johns Hopkins University. The nation’s total death toll surpassed 380,000.
  • More than 131,000 people were hospitalized for Covid-19 as of Tuesday, according to the Covid Tracking Project, slightly higher than the previous day’s tally. The number of patients in intensive care units rose to 23,881, the 14th day in a row above 23,000.
  • As the number of daily infections remained elevated, the U.S. moved to speed up the deployment of vaccines.
  • The Trump administration plans to release doses that were reserved for booster shots and is urging states to give the vaccine to anyone age 65 and older, as well as to people with high-risk health conditions such as diabetes, obesity and cancer.
  • The Centers for Disease Control and Prevention, meanwhile, said Tuesday that before boarding flights to the U.S., international passengers will be required to show proof of a negative Covid-19 test performed no more than three days earlier.
  • The Dutch government decided to extend its lockdown at least until Feb. 9, due to a continued high number of Covid-19 infections and the presence of the more contagious U.K. variant of the coronavirus.
  • Belgium also extended its lockdown for another two weeks last Friday, amid a spike in infections as people returned from holidays despite authorities strongly advising against travel abroad.
  • In Germany, authorities continued to tighten restrictions on movement and socialization. The state of Bavaria became one of the first governments in the world to make the wearing of high-quality N95 masks that can block viruses compulsory in public transport and in shops.
  • Germany registered 19,600 new cases on Tuesday, according to the Robert Koch Institute for infectious diseases, roughly in line with their level a week ago, with 1,060 new Covid-19-related deaths recorded in one day.
  • The current lockdown might extend beyond the end of January and tougher restrictions could be needed in order to stop the spread of the more infectious variant of the virus, Health minister Jens Spahn told the Deutschlandfunk public radio.

Target holiday sales jump 17% on strong online demand – Reuters, 1/13/2021

  • Target reported a 17.2% rise in comparable sales for the holiday season on Wednesday as online sales more than doubled, thanks to faster deliveries and higher demand for home goods, electronics and beauty products.
  • Target’s sales through Shipt same-day delivery service jumped more than 300% in the November-December period, while demand at its Drive Up service where customers go to stores to collect their orders jumped more than sixfold.
  • The retailer’s store traffic also rose 4.3% during the holiday season as people combined their shopping trips and limited it to large retailers amid a surge in pandemic.
  • Target said sales trends so far in January has been strong. Analysts on average expect its fourth-quarter comparable sales, which includes January, to rise 12.7%. Its sales in the third quarter had risen 20.7%.

Ford sold 602,627 vehicles in China in 2020, up 6% year-on-year – Reuters, 1/13/2021

  • Ford Motor said on Wednesday it sold 602,627 vehicles in China last year, up 6% from 2019, its first annual growth in the world’s biggest car market since 2017.
  • After a peak of 1.08 million vehicles in 2016, Ford’s sales began faltering in late 2017.
  • In the past three months, Ford sold 190,916 vehicles, up 30% from the same period last year.

Boeing limps into 2021 with more 737 MAX cancellations, delayed 787 deliveries – Reuters, 1/13/2021

  • Boeing delivered about 60% fewer aircraft to customers in 2020 than 2019 and less than one-third the deliveries of rival Airbus, the lowest in 43 years, company data showed on Tuesday.
  • Also, for a second month, Boeing handed over zero 787 Dreamliners to customers, as intensive inspections over recent production flaws compounded delays from the COVID-19 crisis.
  • Overall, the U.S. planemaker delivered 39 planes to customers in December, including 27 737 MAX jets, one P-8 maritime patrol aircraft, and 11 widebodies.
  • For the year, it delivered a total of 157 airplanes, down from 380 in 2019 and a record 806 jets in 2018.
  • By comparison, Airbus posted stronger-than-expected deliveries of 566 jets in 2020, remaining the world’s largest planemaker, a title Boeing held from 2012 through 2018.
  • Even so, deliveries at Airbus fell 34% from a record a year earlier, when travel demand was riding high on the increasing mobility of consumers in fast-growing markets across Asia.

J&J may not meet U.S. COVID-19 vaccine supply target by spring: NYT – Reuters, 1/13/2021

  • Johnson & Johnson is facing unexpected delays in the manufacturing of its coronavirus vaccine and may not be able to supply as many doses it promised the U.S. government by spring, the New York Times reported on Wednesday.
  • U.S. federal officials have been told that J&J has fallen behind its original production schedule and will not catch up until the end of April, when it agreed to deliver more than 60 million doses, the NYT reported, citing people familiar with the situation.
  • Earlier this week, J&J’s chief executive officer said the company was on track to have close to a billion COVID-19 vaccine doses by 2021-end, and that it was in the final stages of analyzing data from a large trial of the vaccine.
  • In August, J&J signed a $1 billion contract with the U.S. government to supply up to 100 million doses by mid-2021.

Visa Abandons Planned Acquisition of Plaid After DOJ Challenge – Wall Street Journal, 1/13/2021

  • Visa abandoned its $5.3 billion planned acquisition of financial-technology firm Plaid amid a Justice Department antitrust lawsuit that challenged the deal.
  • The department sued to block the deal in November, alleging the acquisition would allow Visa to unlawfully maintain a monopoly in the online debit-card market.
  • Plaid, the government argued, was a nascent but important competitive threat to Visa, and eliminating that threat would lead to higher prices, less innovation and higher entry barriers for online debit services.
  • The Plaid acquisition would have allowed Visa to further diversify its payments capabilities beyond cards.

Qualcomm Bolsters 5G Ambitions with Planned $1.4 Billion Acquisition – Wall Street Journal, 1/13/2021

  • Mobile-phone chip giant Qualcomm said Wednesday that it has agreed to acquire a chip startup founded by former Apple engineers, adding to a wave of deals remaking the semiconductor industry.
  • Qualcomm said it plans to buy Nuvia and use the two-year-old company’s technology in its flagship smartphones, driver-assistance systems, laptops and networking infrastructure.
  • Nuvia’s expertise in designing central processing units, Qualcomm said, would help it boost chip performance and power efficiency—characteristics that are vital to success in the hot 5G-networking market that Qualcomm has made a priority.

Intel Ousts Chief Executive Bob Swan – Wall Street Journal, 1/13/2021

  • Intel ousted Chief Executive Bob Swan in a surprise move after activist hedge fund Third Point urged sweeping changes at the company to revive the U.S. semiconductor giant’s fortunes.
  • Intel on Wednesday said Mr. Swan would be replaced by VMWare CEO Pat Gelsinger effective Feb. 15. Mr. Gelsinger once served as Intel’s technology chief.
  • Third Point Chief Executive Daniel Loeb in a December letter to Intel Chairman Omar Ishrak said the company’s woes could threaten the U.S. tech industry and urged the chip maker to consider alternatives, including selling some of its acquisitions and splitting its design and manufacturing operations—a move that would end Intel’s long-held status as America’s leading integrated semiconductor maker.

Intel’s self-driving car unit plans to step up use of its own radar tech by 2025 – Reuters, 1/13/2021

  • The head of Intel’s self-driving car subsidiary said on Tuesday the company wants to shift toward using its own radar-based technology and use a single lidar sensor per vehicle by 2025 in a bid to lower the cost of autonomous driving.
  • For more advanced systems, the company plans to add both radar sensors, which use radio waves to detect distance from objects, and lidar, a laser-based system that helps self-driving vehicles gain a three-dimensional view of the road.
  • For a planned fleet of so-called robotaxis, which are commercial vehicles meant to ferry around passengers, the company is tapping sensors from Luminar Technologies.
  • But Mobileye is also developing its own lidar sensor that it plans to start using in 2025 for cars aimed at consumers.

Dropbox to layoff 11% of workforce, COO to step down – Reuters, 1/13/2021

  • Dropbox on Wednesday announced the exit of operations chief and said it will cut 11% of its global workforce, or 315 people, as the file hosting service provider shifts business resources in the wake of the COVID-19 pandemic.
  • Shares fell nearly 6% to $22.26 after Dropbox said Chief Operating Officer Olivia Nottebohm, who joined last year from Alphabet’s Google, will step down on Feb. 5.
  • Dropbox did not provide details of a replacement for the COO.

US ECONOMY & POLITICS

Gasoline pushes U.S. consumer prices higher in December – Reuters, 1/13/2021

  • The Labor Department said on Wednesday its consumer price index increased 0.4% last month after gaining 0.2% in November.
  • An 8.4% jump in gasoline prices accounted for more than 60% of the rise in the CPI.
  • In the 12 months through December the CPI advanced 1.4% after increasing 1.2% in November.
  • Last month’s CPI readings were in line with economists expectations. The CPI rose 1.4% in 2020.
  • That was the smallest yearly gain since 2015 and was a deceleration from 2.3% in 2019.
  • Excluding the volatile food and energy components, the CPI edged up 0.1% after climbing 0.2% in November.
  • The core CPI gained 1.6% year-on-year, matching November’s rise. It increased 1.6% in 2020 after rising 2.3% in 2019. That was below the 2.0% average annual rate over the past 10 years.

House Set to Impeach Trump Again, With GOP Support – Wall Street Journal, 1/13/2021

  • The House prepared to vote to impeach President Trump on Wednesday afternoon for an unprecedented second time, alleging he encouraged a mob to storm the U.S. Capitol as part of an effort to overturn Democrat Joe Biden’s election win.
  • At least several Republicans are expected to join all Democrats in approving an article of impeachment against Mr. Trump with less than a week to go in his term, as law-enforcement officials nationwide are bracing for more potential violence in Washington and in state capitals.
  • After the vote, expected in the afternoon, the matter would go to the Senate, where the date of a trial, and the level of Republican support, is uncertain.
  • The president, in his first public appearance since the Capitol riot last week, said Tuesday he had no regrets about his remarks to supporters.
  • He called the efforts to remove him from office over his comments a continuation of what he has termed a Democrat witch hunt.

Democrats Plan Policy Path on Next Round of Stimulus Checks, Other Aid – Wall Street Journal, 1/13/2021

  • Democrats take control of the White House and Senate this month with a large economic-relief package and $2,000 stimulus checks atop their agenda. But their slim majorities and procedural constraints will challenge their ability to design and pass those measures quickly.
  • Mr. Biden will release his detailed coronavirus relief plan Thursday and call for trillions of dollars from Congress.
  • Democrats agree broadly—but not universally—that a priority is to increase the $600 checks approved in December to $2,000, and they promised to do so if they won the Senate runoffs in Georgia.
  • But Republicans have resisted some of those Democratic ideas during previous negotiations, including aid to states that they call unnecessary because state budgets haven’t been hit as hard as expected.
  • Some say aid should be focused on those who need it most.
  • Not all Democrats are ready to embrace another round of checks.
  • “I did not support the $2,000 checks before because I had not seen the statistics that would stimulate the economy and bring jobs,” Sen. Joe Manchin (D., W.Va.) said in an interview. “Before we start throwing checks out again, we better make sure [we know] where they’re going and that they’re effective.”
  • If Democrats move a first bill through reconciliation, they have an incentive to pack many party priorities into that effort because there are limits on how many such bills they can pass.
  • Each will require the House and Senate to adopt a budget resolution that sets the parameters for the size and scope of the plan and then follow up with details.

Fed’s Bullard says all signs point to inflation rising – Reuters, 1/13/2021

  • All signs are pointing to a rise in U.S. inflation, St. Louis Federal Reserve President James Bullard said on Wednesday.
  • The money supply has “exploded,” fiscal deficits are “off the charts” and a hot economy may either already be here or “just around the corner,” Bullard said in an interview at the Reuters Next conference.
  • Still, he said, the Fed needs to regain credibility on inflation after it has underrun the Fed’s 2% target for the last decade, and won’t preemptively react to a rise in inflation by tightening policy.

Exclusive: U.S. tells European companies they face sanctions risk on Nord Stream 2 pipeline – Reuters, 1/13/2021

  • The U.S. State Department this month told European companies which it suspects are helping to build Russia’s Nord Stream 2 gas pipeline that they face the risk of sanctions as the outgoing Trump administration prepares a final round of punitive measures against the project, two sources said on Tuesday.
  • The U.S. source said the State Department is expected to issue a report by Thursday or Friday on companies it believes are helping the Russia-to-Germany pipeline.
  • Companies that could be in the report include ones providing insurance, helping to lay the undersea pipeline, or verify the project’s construction equipment, the source said.
  • The companies could be at risk of U.S. sanctions under existing law if they do not stop work.

EUROPE & WORLD

Lenovo Plans China Listing, Sending Stock Soaring – Wall Street Journal, 1/13/2021

  • Lenovo is capitalizing on two booming markets, Chinese stocks and the global PC industry, to list in Shanghai.
  • The news that Lenovo would join the STAR Market, China’s answer to the Nasdaq, boosted its Hong Kong-traded shares, which on Wednesday hit their highest level since 2015.
  • Lenovo and Megvii Technology, an artificial-intelligence startup specializing in facial recognition, will be among the first companies to make use of a structure known as a Chinese depositary receipt to raise funds.
  • Lenovo, which bought ThinkPad in 2005, now accounts for one in four of the world’s PC shipments. Its PC revenue hit a high in the three months through September.

Factmonster – TODAY in HISTORY

  • Douglas Wilder of Virginia became the first elected African-American governor in the United States. (1990)
  • Michael Jordan announced his second retirement from the NBA. He would “unretire” again in 2001. (1999)
  • Joseph Darby, a U.S. soldier at Iraq’s Abu Ghraib prison, reported U.S. abuses of Iraqi prisoners to the Army’s Criminal Investigations Division. (2004)

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