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Daily Market Report | Mar. 22, 2021

Tech Shares Start Week Higher – Wall Street Journal, 3/22/2021

  • U.S. stocks climbed on Monday, as gains in technology stocks powered the Nasdaq Composite higher.
  • The tech-heavy index rose 0.8% in morning trading, recovering some ground after it declined last week. The S&P 500 gained 0.4%, while the Dow Jones Industrial Average inched up 0.1%.
  • Investors continued to train their attention on bond markets after a drop in the price of U.S. government debt last week. Ten-year Treasury notes recovered some ground Monday, sending yields down to 1.698%, from 1.729% Friday. Yields fall when bond prices rise.
  • Many investors expect bond yields to keep rising as the economy picks up speed, posing a challenge to tech stocks that powered the broader market higher in 2020.
  • In corporate news, Railroad Kansas City Southern rallied 14% after agreeing to be bought by Canadian Pacific Railway in a transaction valued at about $25 billion. New York-listed shares of Canadian Pacific fell 2.4%.
  • In currencies, Turkey’s lira slumped about 9% to trade at 7.93 per dollar after the replacement of the country’s top central banker late last week.
  • Asian markets were mixed. China’s Shanghai Composite Index rose 1.1%, while Hong Kong’s Hang Seng Index fell 0.4% and Japan’s Nikkei 225 dropped 2.1%.

Covid-19 Live Updates: Newly Reported U.S. Cases Fall Below 40,000 – Wall Street Journal, 3/22/2021

  • Newly reported coronavirus cases in the U.S. fell below 40,000 for the first time in a week, as vaccine production gains momentum.
  • The U.S. reported more than 33,000 new cases for Sunday, according to data compiled by Johns Hopkins University that was published early Monday. Sunday’s figure was a decline from the 55,285 cases reported the previous day and also down from the more than 38,000 new cases reported a week earlier.
  • The country reported 430 Covid-19 fatalities for Sunday, the lowest daily death toll since Oct. 12. The country’s total death toll topped 542,000, according to Johns Hopkins data.
  • Nearly a quarter of the U.S. population has received at least one dose of a Covid-19 vaccine and an average of 2.5 million doses a day were administered over the past week, according to a Wall Street Journal Analysis of data from the Centers for Disease Control and Prevention.
  • The German government is holding an emergency meeting with state authorities on Monday to discuss new confinement measures after a steep rebound in Covid-19 cases.
  • The country has been in various flavors of lockdown since early November but while new cases began falling in January, they started rising again rapidly three weeks ago and are now growing exponentially.
  • Germany registered 7,709 new cases on Sunday, over a thousand more than a week ago. Hospitalizations have also rebounded.
  • The development is likely to put an abrupt end to a tentative relaxation of lockdown restrictions that started last week, with a limited reopening of some shops. Many schools that have reopened are now expected to close again.
  • According to a draft document seen by The Wall Street Journal, the government is also proposing a nightly curfew for the first time.
  • Elsewhere in continental Europe, cases are also rising as new virus variants spread rapidly. On Friday, the French government announced a new lockdown for Paris and 15 other areas in the country.

Railroads Strike a $25 Billion Merger – Wall Street Journal, 3/22/2021

  • Canadian Pacific Railway agreed to acquire Kansas City Southern in a transaction valued at about $25 billion that would create the first freight-rail network linking Mexico, the U.S. and Canada.
  • The combination, which faces a lengthy regulatory review, is a long-term wager on an interconnected North American economy.
  • It marks the third major U.S. railroad that the Canadian company has targeted in its quest to create a transcontinental network. Canadian Pacific abandoned the two prior efforts—in 2014 and 2016—amid resistance from the takeover targets themselves as well as opposition from rivals, shippers and U.S. regulators.
  • If approved by regulators, the deal would unite the two smallest of the seven major North American freight carriers, linking factories and ports in Mexico, farms and plants in the Midwestern U.S. and Canada’s ocean ports and energy resources.
  • The combined company, to be renamed Canadian Pacific Kansas City, would have about $8.7 billion in annual revenue and employ nearly 20,000 people.

Renesas Chip-Plant Fire Spreads Concerns About Global Auto Production – Wall Street Journal, 3/22/2021

  • A fire at a factory of one of the world’s leading auto chip makers has added to the troubles of car makers that already have slashed production because of a semiconductor shortage.
  • The fire Friday left a swath of charred equipment in the factory owned by a subsidiary of Renesas Electronics in Hitachinaka, northeast of Tokyo. The company said it would take at least a month to restart the damaged operations.
  •  It said two-thirds of the chips made at the fire-affected factory were automotive chips.
  • Renesas’s chief executive, Hidetoshi Shibata, said Sunday the impact on global chip supplies would be significant. Mariko Semetko, a credit analyst at Moody’s Japan, said the fire was likely to damp the recovery of global auto production this year, while auto makers said they were still assessing the impact.

Stellantis pickups hit, Ford cuts production due to global chip shortage – Reuters, 3/20/2021

  • The impact of the global semiconductor shortage on the auto industry spread on Saturday, as Stellantis warned its highly profitable pickup trucks were hit, while Ford Motor said it would cut more U.S. production.
  • Stellantis, the world’s fourth largest automaker, said it will build and hold for final assembly its Ram 1500 Classic trucks at its Warren, Michigan, and Saltillo, Mexico, assembly plants.
  • The action will last “a number of weeks,” a Stellantis spokeswoman said, declining to reveal how many trucks would be affected.
  • Ford said Saturday it will idle its Ohio assembly plant next week, while its Kentucky Truck Plant in Louisville will only work two of three shifts. Both plants will return to full production the week of March 29.
  • On Thursday, Ford said it would assemble its flagship, highly profitable F-150 pickup truck as well as Edge SUVs in North America without certain parts and then hold them “for a number of weeks” until they can be completed and shipped, affecting “thousands” of vehicles.

Apple, Epic Games CEOs on list of witnesses in Fortnite case – Reuters, 3/20/2021

  • Apple and Epic Games have listed their chief executive officers as potential witnesses in a case between the iPhone maker and the video game developer over the App Store payment system, court documents showed.
  • Apple and Epic Games, creator of the popular game Fortnite, have been in a legal battle since last year, when Epic Games tried to avoid a 30% App Store fee by launching its own in-app payment system.
  • In addition to CEO Tim Cook, Apple also named software chief Craig Federighi and App Store Vice President Matt Fischer on a tentative list of witnesses submitted to the U.S. District Court Northern District of California Oakland Division, a copy of which was seen by Reuters.
  • Epic Games listed its founder and CEO Tim Sweeney, its game store manager Steve Allison, and Thomas Ko, head of online business strategy, among its own witnesses for the trial.

ESG Disclosure Rules From Europe Challenge U.S. Fund Managers – Wall Street Journal, 3/22/2021

  • Scores of U.S. fund managers are being forced to comply with sweeping new European rules on climate and other sustainable-finance issues, requiring them to disclose the potential harm their investments could do to the environment and society.
  • Fund companies including Vanguard Group, BlackRock and State Street that sell investment products in the European Union come under the new rules that took effect this month, though details are still being finalized.
  • Surging investor appetite for green investments means that rules on disclosure, both for traditional funds and those that call themselves sustainable, will become increasingly important.
  • In the U.S., the Biden administration is taking the first tentative steps toward imposing similar rules. The Securities and Exchange Commission already is focusing on climate-related disclosures by companies. While any big changes will take years, they could change the way companies disclose information about diversity, carbon emissions and worker pay.

U.S. air travelers top 1.5 million for first time since March 2020 – Reuters, 3/22/2021

  • The number of U.S. air passengers screened topped 1.5 million Sunday for the first time since March 2020, as air travel continues to rebound from a pandemic-related drop, the U.S. Transportation Security Administration (TSA) said Monday.
  • COVID-19 devastated air travel demand, with U.S. airline passengers down 60% in 2020. But with a growing number of Americans getting vaccinated, demand and advanced bookings have started to rise in recent weeks.
  • TSA said it screened 1.54 million people Sunday, the highest single day since March 13, 2020 and the 11th consecutive day screening volume exceeding 1 million per day.

IMF sees signs of stronger global recovery, but significant risks remain – Reuters, 3/22/2021

  • The No. 2 official at the International Monetary Fund on Saturday pointed to emerging signs of a stronger global economic recovery, but warned that significant risks remained, including the emergence of mutations of the coronavirus.
  • IMF First Deputy Managing Director Geoffrey Okamoto said that in early April the Fund would update its January forecast for global growth of 5.5% to reflect additional fiscal stimulus spending in the United States, but gave no details.
  • In a speech to the China Development Forum, Okamoto raised concerns about the growing divergence between advanced economies and emerging markets, with some 90 million people seen falling below the extreme poverty threshold since the pandemic began.
  • The IMF projects that cumulative income per capita in emerging and developing countries, excluding China, between 2020 and 2022 will be 22% lower than it would have been without the pandemic, which will push more people into poverty, he said.
  • The overall outlook remained “exceptionally” uncertain, Okamoto said, adding that it was unclear how long the pandemic would last and access to vaccines remained very uneven, across both advanced and emerging economies.

U.S. Home Sales Fell 6.6% Last Month as Supply Remained Tight – Wall Street Journal, 3/22/2021

  • Sales of previously owned homes slid in February, as the number of homes for sale held at an all-time low and home prices continued to climb.
  • Existing-home sales dropped 6.6% in February from January to a seasonally adjusted annual rate of 6.22 million, the National Association of Realtors said Monday. The February sales marked a 9.1% increase from a year earlier.
  • The shortage of inventory, especially for lower-priced homes, has pushed home prices higher. The median existing-home price rose 15.8% in February from a year earlier to $313,000, NAR said.
  • There were 1.03 million homes for sale at the end of February, unchanged from the revised January level, which was the lowest in data going back to 1982. The level was down 29.5% from February 2020, a record annual decline, according to NAR.
  • At the current sales pace, there was a two-month supply of homes on the market at the end of February.
  • Nationally, there were more real-estate agents in February than there were houses to sell, according to NAR.

Exclusive: U.S. senators press Biden to set end date for gas-powered car sales – Reuters, 3/22/2021

  • California’s two U.S. senators are urging President Joe Biden to set a firm date to phase-out gas-powered passenger vehicles as the White House grapples with how to rewrite vehicle emissions rules slashed under President Donald Trump.
  • In an unreported letter going to Biden Monday, Democratic Senators Alex Padilla and Dianne Feinstein called on Biden “to follow California’s lead and set a date by which all new cars and passenger trucks sold be zero-emission vehicles.” They also urged Biden to restore California’s authority to set clean car standards.
  • Biden’s campaign in 2020 declined to endorse a specific date to end gas-powered vehicle sales, but he has vowed to dramatically boost electric vehicles and charging stations.

PPP Loan Changes Came Too Late for Smallest Businesses – Wall Street Journal, 3/22/2021

  • As Congress considers extending the government’s flagship small business coronavirus-aid plan, some of the smallest businesses want government officials to make some recent changes in the program retroactive.
  • The new rules allow sole proprietors, independent contractors and the self-employed to use gross income rather than net profit when determining the size of their forgivable loan.
  • The tweak followed complaints that the program had disproportionately benefited larger businesses, leaving behind sole proprietors and many minority-owned businesses.
  • Roughly 164,000 loans have been submitted using the new formula, the Small Business Administration said.
  • Another 136,000 small-business owners who might have benefited from the change received PPP loans this year based on the older, less generous formula, according to figures provided by the SBA.
  • As of March 14, the SBA had, in all, approved 2.7 million loans totaling $181 billion, or nearly 64% of available funds, to borrowers applying for aid this year, according to government data. More than 2 million of the loans have been for $50,000 or less.


Turkish Lira Plunges After Erdogan Fires Central Bank Chief – Wall Street Journal, 3/22/2021

  • Turkey’s currency tumbled 9% on Monday, putting it on course for its biggest single-day selloff since 2018, following the abrupt ouster of the central bank governor last week.
  • The turmoil comes after President Recep Tayyip Erdogan on Friday unexpectedly fired Naci Agbal, the central bank governor who had repeatedly raised interest rates in an effort to tame inflation since his appointment in November.
  • Foreign investors say the move renewed concerns that the central bank has lost its independence from political influence, diminishing policy makers’ credibility and sapping appetite for Turkish assets.
  • Turkey’s benchmark Borsa Istanbul 100 stock index plunged by as much as 9.4% Monday, putting it on course for its sharpest selloff since June 2013 and triggering two trading halts.

As U.S. Economic Outlook Brightens, Europe Fears a Cloudy Summer – Wall Street Journal, 3/22/2021

  • European Union governments had hoped that enough Europeans would be vaccinated in the early part of 2021 to loosen restrictions and allow for a relatively normal summer.
  • Instead, the slow pace of the EU’s vaccination campaign, compounded by recent concerns over the safety of AstraZeneca PLC’s shot, means Europe’s economy will lag far behind the U.S. Some tourism-dependant countries such as Spain could even contract again this year.
  • According to Google Mobility data, visits to retail and recreation spaces like restaurants, cafes and shopping centers in Western Europe are half the level of pre-pandemic traffic. In the U.S., visits are about 10% below the level when coronavirus hit.
  • Before the bumpy start to the EU’s vaccination programs, policy makers had expected a modest recovery in the three months through June that would accelerate sharply during the summer on the back of an acceleration in inoculations.
  • Under that scenario, just under half of the eurozone’s 19 members would return to pre-pandemic levels of output by the end of this year, while the eurozone’s economy would expand by about 4% in 2021, compared with 6.5% growth expected in the U.S. this year.
  • If the reopening is delayed by three months or longer, the EU expects the eurozone to grow by just 2.5% this year. Instead of reaching pre-pandemic levels of output by early next year, the eurozone economy wouldn’t recover by the end of 2022.

Factmonster – TODAY in HISTORY

  • The Stamp Act was enacted on the American colonies by Britain. (1765)
  • Auguste and Louis Lumiere first demonstrated motion pictures using celluloid film in Paris. (1895)
  • The Arab League was formed in Cairo, by Egypt, Iraq, Jordan, Lebanon, and Syria. (1945)

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