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Daily Market Report | Mar. 12, 2021

S&P 500 Retreats From Record Levels – Wall Street Journal, 3/12/2021

  • U.S. stocks slipped Friday but remained on track to notch big weekly gains, boosted by signs that the domestic economy is revving up.
  • The S&P 500 fell 0.4% in morning trading. The Nasdaq Composite lost 1.5%. The Dow Jones Industrial Average added about 150 points, or 0.5%, and headed toward a fresh closing high.
  • Stocks have broadly rallied this week following a rebound in technology shares and growing appetite for sectors like banking and energy that would benefit from the economy rebounding.
  • The week has been marked by big swings in stocks and government bonds.
  • On Friday, money managers again fled government bonds as their appetite for the safest assets waned.
  • That sent yields ticking up and sapped demand for richly valued tech shares.
  • The yield on the 10-year Treasury note rose to 1.626% in early trading Friday, from 1.525% the prior session.
  • Bitcoin climbed to a record high, topping $58,700 in overnight trading. It has since pulled back about 5% to around $55,900.
  • In Asia, most major benchmarks closed higher. The Shanghai Composite Index added 0.5%, and Japan’s Nikkei 225 rose 1.7%. Hong Kong’s Hang Seng Index dropped 2.2%.

Covid-19 Live Updates: U.S. Hospitalizations Have Fallen for Two Months – Wall Street Journal, 3/12/2021

  • Newly reported Covid-19 cases in the U.S. rose from a day earlier, exceeding 60,000 for the first time this week, as President Biden called on states to make all adults eligible for vaccines by May 1.
  • There were more than 60,000 new cases of Covid-19 reported for Thursday, according to data compiled by Johns Hopkins University and published early Friday morning Eastern time.
  • Thursday’s figure was higher than the 58,735 reported a day earlier but lower than the 66,463 reported for March 5.
  • Deaths, a lagging indicator, were at more than 1,400 for Thursday, according to Johns Hopkins data, down from 1,554 a day earlier and 1,762 a week earlier.
  • Hospitalizations from the new coronavirus hit a record high on Jan. 7, when more than 141,000 individuals were hospitalized. Since then, the drop has largely been continuous, week after week.
  • The latest data from the U.S. Department of Health and Human Services show just over 45,000 patients in the hospital with suspected and confirmed cases of Covid-19, a decrease of 68% from January highs.
  • President Biden called on states to make all adults in the U.S. eligible for Covid-19 vaccines by May 1 and set a goal for the public to be able to gather in small groups during Independence Day weekend.
  • As the national vaccine drive gathers momentum, states are divided over the extent to which restrictions should be put in place. Texas’s attorney general sued the city of Austin on Thursday over its attempts to require mask-wearing, the latest in a string of battles between the state and local jurisdictions over Covid-19 health measures.
  • Oklahoma will lift its remaining Covid-19 restrictions, Gov. Kevin Stitt said Thursday, citing declines in new cases and the state’s progress in vaccinations.
  • Mr. Stitt said he would sign an executive order Friday removing restrictions affecting capacity limits on events and public gatherings and the use of masks in state buildings. Most other restrictions expired last June.

Ulta Names President David Kimbell as Next CEO – Wall Street Journal, 3/12/2021

  • Ulta Beauty has named President David Kimbell as its next chief executive officer, succeeding current leader Mary Dillon, as the company continues to weather challenges from slower store foot traffic brought on by the pandemic.
  • Ms. Dillon will move into an executive chairwoman role and serve on the board for one year. She will continue to weigh on the company’s strategy and assist with the transition, the company said. The changes will go into effect in June.
  • Shares tumbled 5.4% after hours to $329 after the leadership change was announced and the company set revenue guidance lighter than what analysts were expecting.
  • In the latest quarter, net sales slipped to $2.2 billion from $2.31 billion a year earlier.
  • Analysts polled by FactSet were targeting $2.08 billion. Its comparable sales for the January quarter declined 4.8%.
  • The beauty retailer said earnings were $171.5 million, or $3.03 a share, down from $222.7 million, or $3.89 a share, in the same period a year earlier. Adjusted earnings were $3.41 a share, ahead of analysts’ expectations of $2.34 a share.
  • The company expects to garner net sales of around $7.2 billion to $7.3 billion for the fiscal 2021 year. Analysts had projected $7.32 billion in revenue.

AT&T raises subscriber forecast for HBO Max as streaming booms – Reuters, 3/12/2021

  • AT&T said on Friday it expects global subscribers of between 120 million and 150 million for HBO Max and HBO by the end of 2025, raising its forecast as more people turn to cheaper streaming services for entertainment.
  • The U.S. wireless company previously projected 75 million to 90 million subscribers for the same period.
  • An advertising-supported version of HBO Max will launch in the United States in June, and HBO Max will expand internationally to 60 markets, the company said.
  • AT&T expects its HBO business unit revenues to more than double over the next five years.

Boeing secures 24 737 MAX orders from investment firm 777 Partners – Reuters, 3/12/2021

  • Boeing said on Friday private investment firm 777 Partners has agreed to buy 24 737 MAX airplanes with an option to purchase a further 60.
  • Miami-based 777 Partners, which has a stake in Canadian ultra-low-cost carrier Flair Airlines, said it plans to lease the 737-8s to its affiliated carriers.
  • Reuters exclusively reported on Wednesday that Boeing is close to a multibillion-dollar deal to sell dozens of its 737 MAX 7 jets to Southwest Airlines.

Qualcomm struggles to meet chip demand as shortage spreads to phones: sources – Reuters, 3/11/2021

  • Qualcomm is struggling to keep up with demand for its processor chips used in smartphones and gadgets, as a chip shortage that first hit the auto industry spreads across the electronics business, industry sources told Reuters.
  • Samsung Electronics, the world’s largest smartphone maker, is experiencing a shortage of Qualcomm’s application processors, the heart of smartphones, two people at suppliers for the South Korean giant told Reuters.
  • One person at a Samsung supplier said a Qualcomm chip shortage was hitting production of mid- and low-end Samsung models.
  • The second person, at another supplier, said there was a shortage of Qualcomm’s new flagship chip, the Snapdragon 888, but did not say whether this was affecting the manufacturing of Samsung’s high-end phones.
  • Separately, a senior executive at a top contract manufacturer for several major smartphone brands told Reuters it was facing a shortage of a range of components from Qualcomm and would cut handset shipments this year. The executive spoke on condition of anonymity.

Investors dump bonds and gold, pile into equities: BofA – Reuters, 3/12/2021

  • Investors piled into equities, while pulling money out of gold and bonds in the week up to March 10, data from BofA Global Research showed.
  • BofA’s weekly flows report showed investors put $31.5 billion into equities, while taking $1.8 billion out of gold and $15.4 billion out of bonds.
  • Citing data from EPFR Global, BofA said last week saw the third-largest flows into emerging market stocks ever, and second-largest into value stocks.
  • BofA also said the U.S. government will spend $879mn every hour in 2021 causing either a rise in bond yields, or a fall in the dollar to “fund fiscal excess”.
  • U.S. debt sustainability will cause higher volatility when higher yields combine with a lower U.S. dollar.

Bill Allowing News Media to Band Together Against Big Tech Gets Another Shot – Wall Street Journal, 3/12/2021

  • Newspapers, TV stations and other news outlets that have seen their revenue siphoned away by online platforms could get an assist from Congress under legislation that a House panel will begin considering on Friday.
  • If passed, the legislation would grant news organizations a four-year exemption from antitrust laws to band together to negotiate compensation from online platforms that use their content, including Facebook and Alphabet’s Google.
  • The bill could also be a bellwether for other measures moving through Congress targeting the market power of big technology companies, which are also under fire from the Justice Department and Federal Trade Commission.
  • Backers have been pushing the legislation to help news organizations for several years, but haven’t been able to win enough support, especially among Republicans.
  • GOP backers of the bill say that is changing, and that they expect to roughly double the number of House Republican co-sponsors of the legislation compared with last year. Republicans have become increasingly critical of big tech companies for what they say is censorship of conservative viewpoints.

Democrats Face Test of Party Unity as They Plan Next Legislative Steps – Wall Street Journal, 3/12/2021

  • In the first months of President Biden’s term, Democrats on Capitol Hill unified around his $1.9 trillion coronavirus relief proposal, quickly passing through Congress a package that closely resembled Mr. Biden’s original plan and notching an early achievement.
  • But Mr. Biden and Democrats will face a far more complicated set of political and policy decisions as they seek to move forward with Mr. Biden’s push for an infrastructure and climate package.
  • The White House hasn’t yet provided a blueprint to Capitol Hill, where Democratic aides and lawmakers are beginning to explore ideas based on previous Democratic plans, according to people familiar with the early efforts.
  • The House passed a $1.5 trillion infrastructure bill last year that emphasized fighting climate change, and only three House Republicans supported that legislation. Mr. Biden proposed a $2 trillion infrastructure plan during the campaign focused on combating climate change.
  • A new broad infrastructure plan that addresses climate change could cost even more, with some Democrats expecting a price tag as high as $3 trillion. The White House hasn’t provided an estimate of the cost.

Direct deposits from U.S. COVID bill to come as early as this weekend, White House says – Reuters, 3/11/2021

  • Direct deposits from the $1.9 trillion COVID-19 relief legislation signed into law by President Joe Biden on Thursday will come as early as this weekend, White House press secretary Jen Psaki said.
  • With the signing of the stimulus bill, Biden commemorated the one-year anniversary of a U.S. lockdown over the coronavirus pandemic with a measure designed to bring relief to Americans and boost the economy.
  • Nearly 160 million households are expected to get payments, according to White House estimates.
  • The bill includes an expanded child tax credit of up to $3,000 per child, or $3,600 for each child under age 6.
  • The Internal Revenue Service will pay part of that in monthly installments of $250 or $300 from July through December, adding a benefits distributor role to the revenue collection agency’s responsibilities.

New Covid-19 Unemployment Benefits to Keep Stimulus Flowing Through Summer – Wall Street Journal, 3/12/2021

  • Enhanced unemployment benefits included in the $1.9 trillion pandemic-relief package signed on Thursday by President Biden could keep billions of dollars a week in stimulus flowing into the economy through the summer.
  • The plan extends two pandemic-related programs and lengthens supplemental $300 payments to all laid-off workers receiving unemployment benefits through early September—well after the effect of $1,400 checks to individuals likely fades.
  • About 20 million people tapped unemployment benefits in mid-February, up from 2 million a year earlier, adding up to more than $10 billion in additional stimulus a week.
  • With the $300 weekly enhancement, the average weekly unemployment benefit for those qualifying through regular state programs is about $620 a week, according to the Labor Department, roughly the equivalent of working full-time at $15.50 an hour.
  • A person receiving the average level of benefits since last March would have been paid about $30,000 in the course of the past year. The extension could allow that individual to receive about $15,000 more.

U.S. producer prices increase; underlying inflation moderate – Reuters, 3/12/2021

  • U.S. producer prices increased strongly in February, leading to the largest annual gain in nearly 2-1/2 years, but considerable slack in the labor market could make it harder for businesses to pass on the higher costs to consumers.
  • The producer price index for final demand rose 0.5% last month, the Labor Department said on Friday. That followed a 1.3% jump in January, which was biggest advance since December 2009.
  • In the 12 months through February, the PPI surged 2.8%, the most since October 2018. The PPI increased 1.7% year-on-year in January.
  • A 6.0% jump in the cost of energy goods accounted for more than two-thirds of the broad-based rise in the PPI last month. Energy prices rose 5.1% in January.
  • Excluding the volatile food, energy and trade services components, producer prices climbed 0.2%. The so-called core PPI accelerated 1.2% in January. In the 12 months through February, the core PPI increased 2.2% after gaining 2.0% in January.


Europe Confronts a Covid-19 Rebound as Vaccine Hopes Recede – Wall Street Journal, 3/12/2021

  • Europe’s fight against Covid-19 is stuck in midwinter, even as spring and vaccinations spur hope of improvement in the U.S. and U.K.
  • Virus infections and deaths have been falling rapidly in the U.S. and U.K. since January as inoculations take off among the elderly and other vulnerable groups. In Europe, however, new Covid-19 cases have been rising again since mid-February.
  • In much of Europe, the spread of the more-aggressive variant first detected in the U.K. is behind the worsening of the pandemic, undoing strenuous efforts to rein in the virus since the fall with an array of restrictions that have brought the EU’s economic recovery to a standstill.
  • French Health Minister Olivier Veran told reporters Thursday that variants now account for more than 70% of new infections in France. Pressure is rising again on intensive-care units in the Paris region, where he said a new patient is admitted every 12 minutes.
  • Mr. Veran said he expected authorities to begin transferring scores of patients out of the Paris area to hospitals in regions that have fewer cases. Nationwide, ICUs are nearly 80% full.

Lockdown hits UK GDP less than feared, but Brexit pummels trade – Reuters, 3/12/2021

  • Britain’s economy shrank by less than feared in January when the country went back into a coronavirus lockdown, but trade with the European Union was hammered as new post-Brexit rules kicked in.
  • Gross domestic product was 2.9% lower than in December, the Office for National Statistics said.
  • Economists polled by Reuters had expected a contraction of 4.9% and government bond prices fell as investors took the data as a sign that the Bank of England was less likely to pump more stimulus into the economy.
  • But the country is racing ahead with vaccinations and, after Friday’s figures, economists said they expected the economy would shrink by 2% in the first quarter of 2021, half the hit forecast by the BoE only last month.

China Regulator Fines Tencent, Baidu, Others Over Investment Deals – Wall Street Journal, 3/12/2021

  • China’s antitrust regulator fined a dozen companies, including Tencent Holdings and Baidu, over a number of past investment deals, the latest sign of Beijing’s broad crackdown on the internet sector.
  • China’s State Administration for Market Regulation said Friday that the 12 companies didn’t properly report past deals and fined them each 500,000 yuan, equivalent to about $77,000.
  • Though the fine is relatively small given the size of the companies being punished, antitrust experts said the move serves as the latest reminder that authorities are intensifying scrutiny over China’s powerful technology giants.
  • In recent months, as China stepped up efforts in taming big tech platforms, authorities moved to plug this loophole by bringing enforcement actions retroactively.
  • Since then, some companies have been reporting past deals to authorities, people familiar with the matter said.

China Lays Plans to Tame Tech Giant Alibaba – Wall Street Journal, 3/12/2021

  • Under founder Jack Ma, Alibaba Group Holding had regulators and local officials in its corner as it grew into a Chinese version of Chinese President Xi Jinping’s recent crackdown on the empire of China’s best-known entrepreneur has put an end to that.
  • Since late last year, Alibaba has been in Beijing’s crosshairs, along with its financial affiliate Ant Group.
  • Regulators already have come down hard on Ant, which they consider a risk to the financial system, forcing it to make changes that will severely hamper its prospects.
  • Alibaba, though, appears destined for softer treatment. Officials familiar with Beijing’s thinking said regulators don’t want to crush a technology powerhouse popular with both Chinese households and global investors—as long as it disassociates itself from its flashy and outspoken founder and aligns itself more closely with the Communist Party.
  • Antitrust regulators are considering a record fine against Alibaba exceeding the $975 million that Qualcomm paid in 2015 over anticompetitive practices, so far the largest in China’s corporate history, according to people with knowledge of the matter.
  • Those people said Alibaba also will be required to end a practice that has been dubbed “er xuan yi”—literally, “choose one out of two”—under which, regulators believe, the tech giant punished certain merchants who sold goods both on Alibaba and its rival platforms, including

Ant Group CEO Simon Hu Resigns – Wall Street Journal, 3/12/2021

  • Ant Group Chief Executive Simon Hu has resigned, the company said Friday, amid heightened scrutiny over the Chinese financial-technology behemoth.
  • Chairman Eric Jing will take up the CEO role, in addition to his current position—a dual role he had held before Mr. Hu became CEO in December 2019.
  • In November, Chinese authorities called off a two-part stock offering by Ant in Hong Kong and Shanghai, which would have been the world’s largest IPO.
  • Mr. Hu was among senior Ant executives summoned to a regulatory meeting the day before the IPO was scuttled.

Exclusive: China’s in talks to purchase stake in brokerage worth $1.5 billion – sources – Reuters, 3/12/2021

  • is in talks to buy part or all of a stake in brokerage Sinolink Securities worth at least $1.5 billion, three people said, as the e-commerce major aims to bolster its financial services operations.
  • A deal to buy the stake from Sinolink’s largest shareholder, Yongjin Group, would be the biggest bet in acquisition value terms by Beijing-based in China’s $45 trillion financial market.
  • China’s 2nd-biggest e-commerce company by revenue started discussions with Yongjin late last year, seeking to buy part or all of its 27% stake, said two of the people with direct knowledge of the matter.
  • Based on Sinolink’s market value of 39 billion yuan ($6 billion) on Thursday, a 27% stake would be worth about 10 billion yuan, Reuters calculations show.

Factmonster – TODAY in HISTORY

  • Mohandas Gandhi began his 200-mile march to protest the British salt tax. (1930)
  • President Franklin D. Roosevelt gave the first of his nation-wide “fireside chats” on radio. (1933)
  • President Truman established the “Truman Doctrine” to aid in the containment of Communism. (1947)

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