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Daily Market Report | Mar. 26, 2021

Stocks Open Higher, On Pace for Weekly Increase – Wall Street Journal, 3/26/2021

  • A surge in shares of financials and energy companies pushed the S&P 500 higher Friday, putting the index on track to end a volatile stretch with a slim weekly gain.
  • The S&P 500 rose 0.5% shortly after the opening bell. The Dow Jones Industrial Average added around 190 points, or 0.6%.
  • The Nasdaq Composite advanced 0.4%.
  • Investors are weighing signals that the U.S. economy is primed for a spell of rapid growth against concerns about rising bond yields and a jump in coronavirus cases that threatens to slow European economies.
  • U.S. household spending fell 1% during a bout of cold weather in parts of the country in February, Commerce Department data showed. Personal income fell 7.1%.
  • In the bond market, the yield on 10-year Treasury notes ticked up to 1.665%, according to Tradeweb, from 1.614% Thursday.
  • It was as low as 0.915% in early January. Yields rise when bond prices fall.
  • Shares of major banks including Morgan Stanley and Citigroup rose shortly after the opening bell.
  • Morgan Stanley added 1.3%, while Citigroup added 1.6%, outperforming the broader market.
  • The Federal Reserve on Thursday said temporary limits on dividend payments and share buybacks will end for most lenders after June 30.
  • Stocks were buoyant in overseas markets. The Stoxx Europe 600 rose 0.9%.
  • China’s Shanghai Composite Index, Japan’s Nikkei 225 and Hong Kong’s Hang Seng all rose roughly 1.6% by the close.

Coronavirus Live Updates: New U.S. Cases Fall as More States Expand Vaccine Eligibility – Wall Street Journal, 3/26/2021

  • Newly reported coronavirus cases in the U.S. declined, as more states took steps to open Covid-19 vaccinations to younger residents.
  • The U.S. reported more than 67,000 new cases for Thursday, according to data compiled by Johns Hopkins University that was published early Friday. The data may update later. Thursday’s tally was down from the previous day’s total of nearly 87,000, which included backlogs of data from at least two states, but it was higher than the more than 60,000 new cases reported a week earlier.
  • The nation reported more than 1,500 Covid-19 fatalities for Thursday, and the total death toll now exceeds 546,800, according to Johns Hopkins data.
  • On Thursday, President Biden said his administration aims to administer 200 million Covid-19 shots by the end of his first 100 days in office, doubling a goal he initially set. An average of 2.5 million doses a day have been administered over the past week.
  • Europe continues to experience a rebound in coronavirus infections as governments struggle to impose new restrictions and speed up vaccinations. France, Italy, Belgium and Germany, among other nations, have all seen sharp increases in new cases since early March and are now back to levels last seen at the end of last year or in early January.
  • The German government has stopped pushing for nationwide measures to contain the pandemic and is now urging local authorities to adopt appropriate steps at their level. This week, the government scrapped a planned five-day Easter lockdown that had caused a torrent of criticism from businesses, local authorities and the media.
  • Italy is expected to partially relax restrictions in parts of the country where infections are slowing, including in Lazio, the region around Rome. From next Tuesday, schools, shops and hairdressers are likely to reopen in Rome. Italy’s government is set to make a decision on Friday.

State Expands Vaccine Eligibility to 50+ Californians Starting April 1 and All Individuals 16+ on April 15 Based on Expected Supply Increases – gov.ca.gov, 3/26/2021

  • With supply of vaccines expected to significantly increase in the coming weeks, the state is expanding vaccine eligibility to more Californians.
  • Starting April 1, individuals aged 50+ will be eligible to make an appointment, and individuals 16+ will be eligible to make an appointment to be vaccinated starting on April 15.
  • Based on the current estimates, California expects to be allocated approximately 2.5 million first and second doses per week in the first half of April, and more than 3 million doses in the second half of April.
  • California currently receives about 1.8 million doses per week.

Suez Canal Blockage Forces Operators to Reroute Ships – Wall Street Journal, 3/26/2021

  • The operator of the ship blocking the Suez Canal said it would take at least two or three more days to dig the vessel out of the waterway’s bank, while other ship operators began rerouting tankers and containers—in some cases sending them on a two-week extended voyage around the southern tip of Africa.
  • Meanwhile, shipping companies have reported more than 300 idled vessels on either side of the canal, which links the Mediterranean Sea with the Red Sea and is a crucial waterway for global trade and energy shipments.
  • Many shipowners have now decided to reroute. Early Friday, the Ever Greet, a sister ship to the Ever Given, was rerouted away from Suez and toward Africa’s Cape of Good Hope, according to MarineTraffic, a shipping tracker. The vessel was sailing from Malaysia to Rotterdam.
  • The Suez blockage “will drastically reduce global container shipping capacity and lead to further delays for American importers to get their orders delivered,” said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting. “This couldn’t have come at a worse time because all ships available have already been deployed.”

U.S. money market funds see massive inflows in week to March 24 – Lipper – Reuters, 3/26/2021

  • Investments into U.S. money market funds surged to an 11-month high in the week to March 24, on concerns over rising coronavirus cases in Europe and the cost of infrastructure spending and potential tax increases to pay for U.S. President Joe Biden’s $1.9 trillion relief bill.
  • U.S. money market funds secured a net $60.16 billion in the week, the highest since April 2020, data from Refinitiv Lipper showed.
  • A retreat in U.S. bond yields lured money inflows into U.S. equity funds, which saw net purchases of $14.1 billion; however, it was 27% lower than in the previous week.
  • The inflows were mainly into large-cap funds, with mid-cap and small-cap funds facing outflows, which indicated investors’ preference toward safer stocks amid soaring global risks.
  • U.S. value funds saw an inflow of just $339 million, the lowest in three weeks, while growth funds attracted over $4 billion for a second successive week.

Microsoft Is in Exclusive Talks to Acquire Discord – Wall Street Journal, 3/26/2021

  • Microsoft is in advanced talks to acquire messaging platform Discord for $10 billion or more, according to people familiar with the matter, as the software giant seeks to deepen its consumer offerings.
  • Microsoft and Discord are in exclusive talks and could complete a deal next month, assuming the negotiations don’t fall apart, the people said.
  • Buying the six-year-old startup could help Microsoft boost both its videogame business, which includes the successful Xbox game platform, and its social-networking footprint.
  • The technology giant has made a series of acquisitions in recent years, including its $7.5 billion purchase of software-development platform GitHub in 2018 and its $7.5 billion purchase of videogame company ZeniMax Media, which closed earlier this year.

Disney+, Netflix Hikes Bring Cost of Cord-Cutter Package to $92 – sources – Bloomberg, 3/26/2021

  • With recent price increases at Disney+ and Netflix — along with the debut of Paramount+ and Discovery+ — the streaming landscape is evolving quickly.
  • If you put together the flagship streaming services from the biggest media and tech companies, including Amazon.com Inc., AT&T, Netflix, and Walt Disney, it would now cost you $92 a month in the U.S.
  • That is almost as much as a typical cable-TV subscription, which S&P Global Market Intelligence puts at $93.50.

Exclusive: Robinhood aims to allow users to buy into IPOs – sources – Reuters, 3/26/2021

  • Robinhood Markets is building a platform to “democratize” initial public offerings (IPOs), including its own, that would allow users of its trading app to snap up shares alongside Wall Street funds, according to people familiar with the matter.
  • The move could further erode Wall Street’s grip on stock market flotations. It would be easier to implement for Robinhood’s own IPO, given how companies and their investment bankers tightly control allocations to investors in new listings.
  • Since shares often trade higher when they debut, big funds that get allocations in the IPO have an advantage. The average first-day trading pop on U.S. listings of businesses in 2020 was 36%, according to data provider Dealogic.

Startups Axios and the Athletic Discuss Merger, Consider SPAC Deal – Wall Street Journal, 3/26/2021

  • Sports-media outlet the Athletic is in merger talks with news startup Axios, according to people familiar with the matter, part of a plan to build a larger online-publishing company that could include going public through a blank-check firm.
  • The discussions are at an early stage and could fall apart, the people said. Financial terms couldn’t be learned.
  • The plan under consideration calls for both the Athletic and Axios to continue operating as distinct digital properties, each with their own journalists and editorial products, one of the people said.

Fed Says Restrictions on Payouts to End for Most Banks After June 30 – Wall Street Journal, 3/26/2021

  • The Federal Reserve said temporary limits on dividend payments and share buybacks will end for most banks after June 30, following the completion of annual stress tests to determine their resilience to a hypothetical downturn.
  • The move is a vote of confidence for big banks from the Fed, which placed restrictions on bank payouts last summer, citing the need to conserve capital during the coronavirus-induced downturn. It initially barred buybacks and capped dividends so that they would not exceed a bank’s recent profits.
  • In its announcement Thursday, the Fed said any bank that falls below any of its minimum risk-based requirements in the coming test will remain subject to the additional restrictions for three more months, through Sept. 30.
  • A firm that remains below the capital required by the stress test at that time faces even stricter distribution limitations under Fed rules.

Tesla CEO Musk’s anti-union tweet from 2018 must be deleted: U.S. labor board – Reuters, 3/26/2021

  • Tesla Chief Executive Officer Elon Musk’s 2018 tweet threatening employees would lose their stock options if they formed a union was illegal and should be deleted, the U.S. National Labor Relations Board said on Thursday.
  • The NLRB backed a ruling from a U.S. labor judge in 2019 that the electric-car maker had committed a series of violations of the National Labor Relations Act in 2017 and 2018.
  • The board ordered Tesla to direct Musk to delete the tweet and to post a notice addressing the unlawful tweet at all of its facilities nationwide and include language that says “WE WILL take appropriate steps to ensure Musk complies with our directive.”
  • The NLRB also directed Tesla to offer one former employee reinstatement as well as to rescind 2017 rules that prohibited distributing union literature in its parking lot on non-work time and rules that barred distributing union stickers, leaflets, and pamphlets without first obtaining permission.

U.S. regulators inch toward pet-insurance rules as Sir Purrs A Lot ails – Reuters, 3/26/2021

  • U.S. insurance regulators are close to creating a legal standard for pet insurance that would address long-standing consumer complaints that insurers rarely pay up when their furry friends are not well.
  • A National Association of Insurance Commissioners (NAIC) committee is scheduled to meet on Friday to discuss fine-print provisions about several controversial issues. Among them: determining whether a pet’s condition is “pre-existing” and how long customers must wait after buying coverage to file claims.
  • The pandemic led many Americans to adopt or purchase pets for companionship during extended lockdowns. Dog inquiries on Petfinder, an online pet directory, rose 36% for the year ended January 31, a spokeswoman said.
  • Less than 3% of U.S. pets are insured, compared to 20% in some European markets, according to IBISWorld. The research firm expects pet-insurance earnings to swell from $1.6 billion last year to $2.4 billion in 2025.

U.S. Household Spending Fell 1% in February – Wall Street Journal, 3/26/2021

  • U.S. households cut spending by 1% last month, as cold weather struck much of the country, but are primed to pick up shopping again with the pandemic easing and a new round of stimulus money landing in bank accounts.
  • The drop followed a burst of stimulus-induced spending in January, when spending grew 3.4%, stronger than previously estimated.
  • Household income fell by 7.1% last month, the Commerce Department said, after government stimulus money caused income to rise 10.1% in January.

U.S. consumer mood brightens by most in nearly 8 years – UMich – Reuters, 3/26/2021

  • U.S. consumer sentiment surged in March by the most in nearly eight years as government pandemic relief payments began padding bank accounts and better-than-anticipated progress on vaccinations against COVID-19 bolstered their outlooks, a closely watched survey said on Friday.
  • The University of Michigan’s Consumer Sentiment Index rose to a final reading of 84.9 this month from a preliminary level of 83 at mid-month and from February’s 76.8.
  • The 8.1-point rise was the largest since a matching increase in May 2013, and it brought the index to its highest level since last March, when consumer sentiment began crumbling in the face of the pandemic’s onset.
  • The survey’s expectations index rose to 79.7 in March from 70.7, with the 9-point rise being the largest since April 2009. Views on current conditions rose to 93 from 86.2.

Biden Ties Filibuster Fight to Voting-Rights Push – Wall Street Journal, 3/26/2021

  • President Biden cracked open the door to supporting Senate procedural changes that would exempt voting-rights legislation from requirements that most bills have a 60-vote supermajority, going beyond his previous remarks on the filibuster.
  • He said that “if there’s complete lockdown and chaos as a consequence of the filibuster, then we’ll have to go beyond what I’m talking about.”
  • In his remarks, Mr. Biden lashed out at GOP lawmakers who have introduced measures to tighten states’ voting rules, calling their initiatives “sick” and adding that he would “do everything in my power, along with my friends in the House and the Senate, to keep that from becoming law.”
  • Many Republican-controlled state legislatures say changes are needed to restore faith in the voting process. Democrats say those proposals are efforts to suppress turnout by Democratic supporters.

Senate Democrats Lay Plans for Higher Corporate Taxes – Wall Street Journal, 3/26/2021

  • Democrats in Congress began building the policy case for sharp corporate-tax increases, arguing that Republicans went too far with their 2017 tax cuts.
  • Sen. Ron Wyden (D., Ore.), chairman of the Senate Finance Committee, said he and Sens. Sherrod Brown (D., Ohio) and Mark Warner (D., Va.) will soon release a more detailed framework for how multinational corporations should be taxed.
  • Sen. Bernie Sanders of Vermont, the Budget Committee chairman, released a plan Thursday that would raise $1 trillion over a decade. Sen. Elizabeth Warren (D., Mass.) said she is writing legislation to impose a minimum tax on profitable companies.
  • Currently, that minimum tax is calculated on a world-wide basis, so companies look at their overall foreign tax rates. Democrats, including Mr. Biden, have called for a country-by-country calculation.

EUROPE & WORLD

Tesla’s Chinese rival Nio suspends production on chip shortage – Reuters, 3/26/2021

  • Chinese electric vehicle maker Nio on Friday became the latest automaker to temporarily suspend production because of a global semiconductor chip shortage that has shut down plants and resulted in major losses for the sector.
  • Top automakers such as Ford, Honda, GM and Volkswagen were caught off guard by the shortage even as auto demand picked up during the COVID-19 pandemic, forcing many of them to hold back production.
  • Nio, one the main challengers to Tesla, which dominates the EV market in China, said it would halt production for five working days at its Hefei plant from next week and cut its first-quarter delivery forecast by as much as 1,000 vehicles.
  • Nio now expects to deliver 19,500 vehicles in the first quarter, down from a range of 20,000 to 20,500 vehicles it had previously expected.
  • Swedish truck maker Volvo AB meanwhile said on Tuesday the chip shortage would have a “substantial” impact on its second-quarter earnings, and announced it would implement stop days across its truck manufacturing sites globally beginning in April.

Sweden saw lower 2020 death spike than much of Europe – data – Reuters, 3/25/2021

  • Sweden, which has shunned the strict lockdowns that have choked much of the global economy, emerged from 2020 with a smaller increase in its overall mortality rate than most European countries, an analysis of official data sources showed.
  • Preliminary data from EU statistics agency Eurostat compiled by Reuters showed Sweden had 7.7% more deaths in 2020 than its average for the preceding four years. Countries that opted for several periods of strict lockdowns, such as Spain and Belgium, had so-called excess mortality of 18.1% and 16.2% respectively.
  • Twenty-one of the 30 countries with available statistics had higher excess mortality than Sweden.
  • However, Sweden did much worse than its Nordic neighbors, with Denmark registering just 1.5% excess mortality and Finland 1.0%. Norway had no excess mortality at all in 2020.
  • Infectious disease experts cautioned that the results could not be interpreted as evidence that lockdowns were unnecessary but acknowledged they may indicate Sweden’s overall stance on fighting the pandemic had merits worth studying.

Exclusive: Chinese smartphone maker Xiaomi to make EVs using Great Wall’s plant – sources – Reuters, 3/26/2021

  • China’s Xiaomi plans to make electric vehicles (EVs) using Great Wall Motor’s factory, said three people with direct knowledge of the matter, making it the latest tech firm to join the smart mobility race.
  • Xiaomi declined to comment, while Great Wall said in an exchange filing late on Friday it had not discussed such a partnership with Xiaomi.
  • Xiaomi, one of the world’s biggest smartphone makers, is in talks to use one of Great Wall’s plants in China to make EVs under its own brand, said two of the people, who declined to be identified as the information is not public.
  • Chinese search engine provider Baidu said in January it plans to make EVs using an auto plant owned by Geely – an automaker with aspirations to offer engineering consultancy and contract manufacturing.

Factmonster – TODAY in HISTORY

  • Composer Ludwig van Beethoven died at age 56 in Vienna, Austria. (1827)
  • The battle of Iwo Jima ended; about 22,000 Japanese troops were killed or captured in the fighting and more than 4,500 U.S. troops were killed. (1945)
  • In a ceremony at the White House, President Sadat of Egypt and Prime Minister Begin of Israel signed a peace treaty ending 30 years of war between the two countries. (1979)
  • Vladimir Putin was elected president of Russia. (2000)

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