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Daily Market Report | Mar. 29, 2021

Stocks Fall as Banks Warn of Losses – Wall Street Journal, 3/29/2021

  • U.S. stocks edged lower Monday, pressured by declines in bank shares.
  • The Dow Jones Industrial Average inched down 36 points, or 0.1%.
  • The S&P 500 declined 0.4%, retreating from a record Friday, and the Nasdaq Composite fell 0.7%.
  • Stocks are on course to post gains for the quarter. The S&P 500 is up 5.7%, while the Dow has risen 8.1%.
  • Financial stocks led declines after a large investment fund last week unwound billions of dollars in holdings, triggering concern that global banks that dealt with the firm could face sharp losses.
  • A large trader late last week swiftly unwound holdings in a handful of companies including ViacomCBS and Discovery, leading to their stocks plummeting.
  • The move was by former Tiger Asia manager Bill Hwang’s Archegos Capital Management, which sold $30 billion in holdings, according to people familiar with the matter.
  • Bond yields have largely stabilized following a number of weeks in which their sharp uptick put pressure on equity markets, and particularly growth stocks. The benchmark 10-year Treasury note yield edged down to 1.643%, from 1.658% on Friday.
  • Overseas, the pan-continental Stoxx Europe 600 edged up 0.3%.
  • In Asia, major benchmarks were mixed. Japan’s Nikkei 225 index rose 0.7% and China’s benchmark Shanghai Composite added 0.5%, whereas Hong Kong’s Hang Seng ended the day flat.

Covid-19 Live Updates: Newly Reported U.S. Cases Fall for Second Straight Day – Wall Street Journal, 3/29/2021

  • Newly reported Covid-19 cases in the U.S. were down from a day earlier, following a surge in reported infections last week.
  • The U.S. reported more than 43,000 new cases for Sunday, according to data compiled by Johns Hopkins University and published early Monday morning, Eastern time. It was down from 62,062 a day earlier but up from 33,766 a week earlier.
  • Cases have surged recently, with the U.S. reporting 86,947 on Wednesday and 77,339 on Friday.
  • While down from January’s highs of around 300,000, cases have remained above 50,000 since March 22 and above 60,000 for the four days preceding Sunday, reversing a downward trend that had lasted since March 2.
  • The seven-day moving average of new cases, which smooths out irregularities in the data, was 61,821 as of Saturday, according to a Wall Street Journal analysis of Johns Hopkins data. The 14-day average was 58,438.
  • When the seven-day average is higher than the 14-day average, as it has been since Wednesday, it suggests cases are on the rise.
  • The U.S. reported 507 deaths for Sunday, down from a day-earlier 741 but up from 447 a week earlier. The numbers of reported new cases and deaths tend to be lower toward the beginning of the week.
  • The U.S. vaccine rollout continues, with 15.5% of the population fully vaccinated and 28.2% of the population having received at least one shot, according to data from the Centers for Disease Control and Prevention.

Credit Suisse, Nomura Warn of Financial Hit After Archegos Hedge Fund Selloff – Wall Street Journal, 3/29/2021

  • A fire sale of stocks from a large U.S. investor slammed global investment banks Credit Suisse and Nomura Holdings, which said they could incur substantial losses related to the trades.
  • Shares in Nomura fell 16%, a record single-day drop, Refinitiv data showed. Credit Suisse’s stock tumbled 15%, its biggest fall since last March.
  • In recent days, losses at Archegos Capital Management, run by former Tiger Asia manager Bill Hwang, have triggered the liquidation of positions approaching $30 billion in value, The Wall Street Journal has reported.
  • Nomura estimated the claim against its client at $2 billion, based on Friday’s market prices, and said that could change depending on market moves and how transactions were unwound.
  • Nomura also postponed a planned sale of $3.25 billion in dollar bonds.

Suez Canal Container Ship Is Freed – Wall Street Journal, 3/29/2021

  • The vast container ship that was blocking the Suez Canal for six days has now been freed and is moving north to an anchor point, paving the way to open the critical waterway and end days of global supply delays.
  • Egyptian television images showed tugboats blaring their horns as they towed the Ever Given while Osama Rabie, chairman of the Suez Canal Authority, which runs the channel, announced it had been successfully freed.
  • “Ship transits will likely resume today,” said another person involved in the operation. “We are looking at giving priority to livestock vessels because they are running out of supplies for the animals.”
  • Over 360 vessels are waiting to pass through the canal, blocked since the Ever Given veered into its east side during stormy weather last Tuesday. Some of the ships caught behind in the canal were alerted that they could soon be moving.

Southwest Adds 100 Firm Orders for Boeing 737 MAX 7 – Wall Street Journal, 3/29/2021

  • Southwest Airlines said it added 100 firm orders for the Boeing 737 MAX 7 aircraft, calling the order agreement a signal of confidence in the 737 MAX model.
  • Southwest on Monday said it has scheduled 30 aircraft to be delivered in 2022. The company said it has converted 70 MAX 8 orders to MAX 7 firm orders and added 155 MAX options for MAX 7 or MAX 8 aircraft for 2022 through 2029 as part of the agreement.
  • With the order-book additions and revisions, the company has 349 MAX firm orders and 270 MAX options for MAX 7 or MAX 8 for 2021 through 2031, it said.

Boston Dynamics introduces ‘Stretch’, new warehouse worker robot – Reuters, 3/29/2021

  • U.S. robotics company Boston Dynamics on Monday unveiled a new robot called Stretch, designed to perform one very specific warehouse job: moving boxes.
  • Stretch is the first robot for one task that the company has built, based on requests received from companies around the world, said Michael Perry, vice president of business development for Boston Dynamics.
  • “We heard pretty much universally across warehousing that truck unloading is one of the most physically difficult and unpleasant jobs … And that’s where Stretch comes into play,” Perry told Reuters.
  • Boston Dynamics hasn’t released any pricing for Stretch, but said the system can be installed “without requiring costly reconfiguration or investments in new fixed infrastructure.”

Exclusive: Visa moves to allow payment settlements using cryptocurrency – Reuters, 3/29/2021

  • Visa said on Monday it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry.
  • The company told Reuters it had launched the pilot program with payment and crypto platform Crypto.com and plans to offer the option to more partners later this year.
  • Visa’s latest step, which will use the ethereum blockchain, strips out the need to convert digital coin into traditional money in order for the transaction to be settled.
  • Visa said it has partnered with digital asset bank Anchorage and completed the first transaction this month — with Crypto.com sending USDC to Visa’s Ethereum address at Anchorage.

Biden Plans to Split Spending Plan in Two – Wall Street Journal, 3/29/2021

  • President Biden plans to split up his next big government-spending push into two programs and will lay out his vision for an infrastructure-focused first proposal, including green-energy programs, at an event in Pittsburgh this week, a top administration official said Sunday.
  • The second proposal, which the administration plans to release in April, would focus more on child care and healthcare programs, among other priorities for the administration, White House press secretary Jen Psaki said on “Fox News Sunday.”
  • At some point the administration plans to propose tax increases on higher-income households and businesses to help pay for the programs, though it has yet to lay out its tax strategy or how it will fit together with the next two proposals.
  • Some Democrats believe it would be easier to get Republican support for infrastructure investments in a separate bill and then the administration can pursue its other priorities, including tax measures, through reconciliation, the process which allows the Senate to pass legislation tied to the budget with a simple majority, rather than the 60 votes most bills require.

New Trade Representative Says U.S. Isn’t Ready to Lift China Tariffs – Wall Street Journal, 3/29/2021

  • The U.S. isn’t ready to lift tariffs on Chinese imports in the near future, but might be open to trade negotiations with Beijing, according to U.S. Trade Representative Katherine Tai.
  • In her first interview since Senate confirmation, Ms. Tai said she recognized that the tariffs can exact a toll on U.S. businesses and consumers, though proponents have said they also help shield companies from subsidized foreign competition.
  • “No negotiator walks away from leverage, right?” she said.
  • Under President Donald Trump, the U.S. placed tariffs on about $370 billion of goods from China annually, or roughly three-quarters of its exports to the U.S. by value, as part of a trade war aimed at getting China to drop trade barriers.
  • China retaliated with tariffs on $110 billion of U.S. goods—an even higher percentage of what the U.S. exports to China.
  • During her confirmation hearing, Ms. Tai said she would enforce the trade deal, although she didn’t say how. The accord also calls for the USTR to meet every six months with a Chinese vice premier, in this case Liu He, who negotiated the deal.
  • Although the meeting is two months overdue, no session has yet been set.

Pandemic Accelerates Retirements, Threatening Economic Growth – Wall Street Journal, 3/29/2021

  • The proportion of older workers participating in the labor force is hovering at its worst level since the onset of the coronavirus pandemic, raising the prospect that many of these Americans may have permanently left the workforce, potentially impairing future economic growth.
  • The labor force participation rate—the proportion of the population working or seeking work—for Americans age 55 and older has fallen from 40.3% in February of 2020 to 38.3% this February—representing a loss of 1.45 million people from the labor force.
  • The participation rate initially fell much more for prime-age workers, those between ages 25 and 54, from 82.9% in February last year to 79.8% in April, but has since jumped 1.3 points, to 81.1% in February of this year.
  • By contrast, participation for older workers has shown no rebound from last spring.
  • The proportion of the working-age population not in the workforce due to retirement rose to 19.3% in the fourth quarter of 2020 from 18.5% a year earlier, just before the pandemic, according to government data compiled by the Federal Reserve Bank of Philadelphia.
  • That is roughly 2.4 million workers who left the labor force due to retirement since the pandemic’s onset, more than double the number who did so in 2019, according to Ms. Boussour’s analysis.

EUROPE & WORLD

Chinese EV maker BYD profit up 162% in 2020 – Reuters, 3/29/2021

  • Chinese electric vehicle maker BYD, which is backed by billionaire Warren Buffett, on Monday reported a 162% growth in 2020 net profit as it became a major mask maker amid the COVID-19 pandemic.
  • BYD, which rolled out a customized EV model for ride-hailing services with China’s Didi Chuxing last year, said 2020 revenue dropped 22.6% to 156.6 billion yuan. Analysts expected revenue of 148.76 billion yuan.
  • The Shenzhen-based car company, which has partnerships with Japan’s top automaker Toyota and German Daimler in China, sold 426,972 vehicles in 2020, 7.5% lower from a year earlier.
  • BYD reported 4.23 billion yuan ($643.75 million) net profit in 2020, up from 1.61 billion yuan in 2019.
  • That compared with a 4.6 billion yuan net profit estimated by 22 analysts, according to Refinitiv data.

Malaysia’s AirAsia posts record quarterly loss – Reuters, 3/29/2021

  • Malaysia’s budget airline AirAsia Group reported a record quarterly loss on Monday, as depreciation and impairments deepened the impact of lockdowns, but said it was confident of a full recovery in two years’ time.
  • Revenue fell 92% to 267.4 million ringgit as capacity shrank by 88% compared to a year ago, mainly because of lower capacity in Malaysia, the Philippines and Indonesia, as international borders remained closed, it said in stock exchange filing.
  • AirAsia Group reported a 90% fall in passengers compared to a year ago, resulting in load factor, a measure of how full planes are, dropping 15 percentage points to 67%.
  • Net loss in the October-December period widened to 2.44 billion ringgit ($590.72 million) versus 384.4 million ringgit a year earlier, overtaking the 1.33 billion ringgit loss estimated in a Refinitiv poll.

Exclusive: Italy to cut 2021 GDP forecast to 4.1%, raise 2022 to 4.3% – sources – Reuters, 3/29/2021

  • Mario Draghi’s government expects Italy’s virus-hit economy to grow by 4.1% this year and 4.3% in 2022, three sources close to the matter told Reuters ahead of official publication of the new forecasts next month.
  • The 2021 forecast is a steep downward revision from the 6% growth that had been penciled in by the previous government of Giuseppe Conte, which collapsed in January, while the 2022 projection is above Conte’s target of 3.8%.
  • Both forecasts remain above those of the European Commission, the International Monetary Fund and the Bank of Italy, which all currently see Italian growth below 4% this year and next.
  • Italy’s economy, which shrank by a post-war record of 8.9% in 2020, is still struggling under the weight of the coronavirus pandemic. Much of the country remains in lockdown to try to tame a third wave, with around 20,000 new infections a day.

Myanmar Protesters Return After Security Forces Kill at Least 90 People – Wall Street Journal, 3/29/2021

  • Protesters returned to the streets of Myanmar after soldiers and police gunned down at least 90 people across the country in the bloodiest day since the military began its violent campaign to crush opposition to last month’s coup.
  • Among those killed on Saturday were six children between the ages of 10 and 16 as security forces opened fire in residential areas and into homes, said the Assistance Association for Political Prisoners, a nonprofit that monitors arrests and fatalities.
  • The nonprofit group recorded gunfire and violence against protesters in 40 locations across the country on Saturday, including the two largest cities Yangon and Mandalay, and said the death toll was likely higher than the 90 fatalities it had confirmed.
  • The displays of force are intended to strike fear and suppress resistance to the Feb. 1 coup, which ended Myanmar’s decadelong shift toward democracy and returned the country to absolute military rule.

Covid-19 Variant Rages in Brazil, Posing Global Risk – Wall Street Journal, 3/29/2021

  • Brazil is in the throes of a battle against the new Covid-19 variant from the Amazon that threatens to send shock waves across the globe.
  • Home to less than 3% of the world’s population, Brazil currently accounts for almost a third of the daily global deaths from Covid-19, driven by the new variant. More than 300,000 have died, and daily deaths now top 3,000, a toll suffered only by the far more populous U.S.
  • The so-called P.1 strain, present in more than 20 countries and identified in New York last week, is up to 2.2 times more contagious and as much as 61% more able to reinfect people than previous versions of the coronavirus, according to a recent study.
  • Researchers said preliminary studies suggest the existing vaccines being rolled out across the world are effective on P.1, but further studies are needed to check if their efficacy is reduced with the new variant.

Damage from fire at Renesas chip factory worse than first thought – Reuters, 3/29/2021

  • Renesas Electronics now believes damage from a fire at its chip-making plant was more extensive than first thought, the Nikkei daily newspaper reported on Monday.
  • The company had initially said 11 machines were damaged, but the Nikkei reported that the number of inoperable machines was now believed to be around 17. A company spokeswoman would not confirm a specific number.
  • The company has said it will take at least a month to resume production at its 300mm wafer line, but replacing damaged machines could take several months.
  • The company accounts for 30% of the global market for microcontroller units used in cars, and two-thirds of the chips produced at the facility are for the auto industry.

Factmonster – TODAY in HISTORY

  • For the first time in recorded history, Niagara Falls stopped flowing. An ice jam in the Niagara River above the rim of the falls caused the water to stop. (1848)
  • The North America Act was passed by the British parliament, creating the dominion of Canada. (1867)
  • William Calley was convicted of murdering 22 Vietnamese civilians in the My Lai massacre. (1971)
  • The last U.S. troops left South Vietnam. (1973)

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