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Daily Market Report | Apr. 06, 2021

Stocks Hover Near Records – Wall Street Journal, 4/6/2021

  • Major U.S. stock indexes hovered in record territory Tuesday after signs of rapid economic recovery propelled them to all-time highs a day earlier.
  • The S&P 500 edged up 0.1%, putting it on pace for another record close.
  • The Dow Jones Industrial Average was little changed after notching its 18th closing record of 2021 on Monday.
  • The tech-heavy Nasdaq Composite added 0.2% but remains down about 2.5% from its February record.
  • Yet investors say there remains ground for caution, pointing to risks such as the potential for fresh volatility in the U.S. government-bond market as well as a pickup in coronavirus cases.
  • Some worry that a spurt of inflation will prompt the Federal Reserve to raise interest rates before its projections indicate, pulling back some of the monetary stimulus that helped to power markets higher for the past year.
  • The country reported more than 78,000 new cases for Monday, according to data from Johns Hopkins University.
  • The seven-day average is above the 14-day average, indicating that cases are rising, according to a Wall Street Journal analysis.
  • On the economic front, the International Monetary Fund raised its projections for global economic growth for this year and next to 6% and 4.4%, respectively.
  • The IMF cited stimulus spending by the U.S. and other rich nations and the accelerating rollout of Covid-19 vaccines.
  • In Asian markets, Japan’s Nikkei 225 fell 1.3%, and the Shanghai Composite Index ended the day relatively flat.

Covid-19 Live Updates: New U.S. Cases, Deaths Rise – Wall Street Journal, 4/6/2021

  • Newly reported coronavirus cases in the U.S. rose, as several states resumed reporting data after the Easter weekend, while vaccination efforts across the country continued to accelerate.
  • The U.S. reported more than 78,000 new cases for Monday, according to data compiled by Johns Hopkins University that was published early Tuesday. The data may update later.
  • Monday’s figure was sharply higher than the previous day’s tally, as several states, including Ohio, Minnesota and Kentucky didn’t report data on Easter Sunday.
  • The U.S. reported 603 Covid-19 fatalities for Monday, bringing the nation’s total death toll to more than 555,600, according to Johns Hopkins data.
  • While new cases remain elevated, the pace of vaccinations in the U.S. has been gaining steam, with an average of 3.1 million Covid-19 vaccine doses administered each day over the past week, according to a Wall Street Journal analysis of Centers for Disease Control and Prevention data. More than 32% of people in the country have received at least one dose of a vaccine.
  • President Biden intends to say Tuesday that all U.S. adults should be eligible for Covid-19 vaccines by April 19, speeding up a timeline he set out last month, an administration official said.

IMF Boosts Global Growth Forecast, Warns of Diverging Rebound – Bloomberg, 4/6/2021

  • The International Monetary Fund upgraded its global economic growth forecast for the second time in three months, while warning about widening inequality and a divergence between advanced and lesser-developed economies.
  • The global economy will expand 6% this year, up from the 5.5% pace estimated in January, the IMF said in its World Economic Outlook published on Tuesday.
  • That would be the most in four decades of data, coming after a 3.3% contraction last year that was the worst peacetime decline since the Great Depression.
  • For 2022, the fund saw global growth at 4.4%, higher than the 4.2% previously projected.
  • Still, many advanced economies will not return to their pre-pandemic output levels until 2022, the IMF said, and emerging-market and developing economies may take until 2023 to recover those levels.
  • The world economy in 2024 will be about 3% smaller than anticipated before the Covid-19 outbreak, the IMF said last week.

Amazon Is the Target of Small-Business Antitrust Campaign – Wall Street Journal, 4/6/2021

  • Merchant groups are forming a national coalition to campaign for stricter antitrust laws, including measures they hope could force Amazon.com to spin off some of its business lines.
  • The effort is being launched Tuesday by trade groups that represent small hardware stores, office suppliers, booksellers, grocers and others, along with business groups from 12 cities, organizers say.
  • The groups, which collectively represent thousands of businesses, want federal legislation that would prevent the owner of a dominant online marketplace from selling its own products in competition with other sellers, a policy that could effectively separate Amazon’s retail product business from its online marketplace.
  • The merchant groups also want tougher enforcement of competition laws and legal changes that would make it easier for the government to win antitrust lawsuits against big companies.

Amazon Surpasses 10% of U.S. Digital Ad Market Share – Wall Street Journal, 4/6/2021

  • Amazon.com’s share of the U.S. digital ad market grew to 10.3% last year from 7.8% in 2019, according to a new report from research firm eMarketer.
  • Amazon’s U.S. ad revenue last year grew to $15.73 billion, up 52.5% from 2019, eMarketer estimates.
  • The company’s U.S. digital ad share is still small relative to Google and Facebook’s, which accounted for 28.9% and 25.2% of the business, respectively, in 2020, according to the report.
  • But Amazon is quickly becoming a viable competitor. It is expected to make up 10.7% of the U.S. digital ad market this year, growing to 11.9% in 2022 and 12.8% in 2023, eMarketer predicts.

United Airlines Plans to Begin Training Pilots at New Academy This Year – Wall Street Journal, 4/6/2021

  • United Airlines Holdings said it would start enrolling students in the pilot training academy it agreed to buy shortly before the pandemic interrupted its plans to bolster hiring, the latest sign of growing optimism in the industry about the long-term outlook for travel.
  • United plans to enroll 100 students in United Aviate Academy in Phoenix this year, with an initial class of 20 students who will start in the third quarter.
  • Students who go through United’s training pipeline will eventually be guaranteed jobs at the airline, which plans to train 5,000 pilots through 2030, about half the number it says it will need over the period.
  • United first announced plans to purchase a flight school in February of 2020, when airlines were racing to hire pilots as quickly as they could to keep up with what was then a boom in travel demand and a shortage in trained pilots.

Southwest recalls 209 pilots as travel demand recovers – Reuters, 4/6/2021

  • Southwest Airlines has recalled 209 pilots from a voluntary extended leave program to support its summer schedule, the company said on Monday, as airlines prepare for a recovery in demand as more Americans receive COVID-19 vaccines.
  • The pilots will return to active status on June 1 and will then complete all of the necessary requalification training requirements before they fly with passengers.
  • Among other major U.S. carriers, Delta Air Lines and American Airlines have also recalled pilots who were sidelined during the pandemic.

U.S. auto industry calls for government help as it warns of impact of chip shortage – Reuters, 4/6/2021

  • A U.S. auto industry group on Monday urged the government to help as it warned the global semiconductor shortage could result in 1.28 million fewer vehicles built this year and disrupt production for another six months.
  • The U.S. Commerce Department should dedicate a portion of funding in a proposed bill to expand U.S. semiconductor production to auto sector needs, the Alliance for Auto Innovation said in written responses to a government-initiated review.
  • The group represents nearly all major automakers with factories in the United States including General Motors, Ford Motor, Volkswagen, Toyota Motor and Hyundai Motor.
  • Most automakers have been hit by the shortage. In recent announcements, Ford said last week it would cut output at seven North American assembly plants, while Kia Motors said it was cutting two days of production in Georgia.

U.S. Job Openings Hit Two-Year High, Signaling More Hiring Ahead – Bloomberg, 4/6/2021

  • U.S. job openings rose to a two-year high in February, led by gains in some of the industries hardest hit during the pandemic and indicating employers are poised to ramp up hiring in the coming months.
  • The number of available positions increased to 7.37 million during the month from an upwardly revised 7.1 million in January, the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, showed Tuesday.
  • The number of people who voluntarily left their job was little changed as the quits rate held at 2.3%. Separations, which include both layoffs and quits, increased to 5.5 million from 5.3 million. That figure is still lower than levels seen in December.

Senate Parliamentarian Rules in Favor of Democratic Reconciliation Effort – Wall Street Journal, 4/6/2021

  • The Senate’s nonpartisan parliamentarian Monday ruled in favor of a Democratic effort to pass additional legislation through a process called reconciliation, according to a spokesman for Senate Majority Leader Chuck Schumer (D., N.Y.), opening the door for Democrats to approve more fiscal measures along party lines in the Senate this year.
  • Democrats have used reconciliation once this year to pass the $1.9 trillion coronavirus relief package, and lawmakers had expected to be limited to using it only one more time this year.
  • With the parliamentarian’s new advice to lawmakers, Democrats could now possibly use it a third time to skirt the 60-vote threshold necessary for most legislation to pass in the Senate.
  • The ruling will give Democrats more room to maneuver to pass President Biden’s agenda, including his recently announced $2.3 trillion infrastructure plan.
  • The White House is expected to roll out another large package in the coming weeks, this time focused on child-care and antipoverty efforts.

Yellen Pushes for Global Minimum Tax Rate on Multinational Corporations – Wall Street Journal, 4/6/2021

  • Treasury Secretary Janet Yellen argued for a global minimum corporate tax rate Monday, seeking international cooperation that is crucial to funding the administration’s $2.3 trillion infrastructure proposal.
  • Ms. Yellen’s remarks came as finance ministers prepared to gather virtually for semiannual meetings of the International Monetary Fund and World Bank this week.
  • Should the Biden plan be enacted without a global minimum tax, a U.S. address becomes a potential disadvantage, meaning that foreign-owned businesses operating overseas could be significantly more profitable than competitors owned by U.S. companies.
  • Ms. Yellen faces another tough task—pushing the Biden administration’s corporate tax increases through a closely divided Congress. On Monday, Sen. Joe Manchin of West Virginia, a key centrist Democrat, said he would prefer a 25% corporate rate.

U.S., Iran Begin Indirect Talks to Revive 2015 Nuclear Deal – Wall Street Journal, 4/6/2021

  • Western and Iranian officials kicked off talks on Tuesday on reviving the embattled 2015 nuclear accord, amid the challenge of bitter relations between Washington and Tehran, punishing U.S. sanctions on the Islamic Republic and moves by Iran to accelerate its nuclear activity.
  • On Friday, the parties to the 2015 nuclear agreement, which placed limits on Iran’s nuclear activity in exchange for lifting international sanctions on the country, announced they would gather in Vienna for talks.
  • The goal of the Vienna meeting is to produce a road map for both the U.S. and Iran to return to compliance with the deal simultaneously. Following initial political meetings, the talks continue among technical working groups and are expected to last several weeks.

EUROPE & WORLD

Credit Suisse Takes $4.7 Billion Hit on Archegos Meltdown – Wall Street Journal, 4/6/2021

  • Credit Suisse Group reported a $4.7 billion hit from the meltdown of Archegos Capital Management, slashed its dividend and said its investment banking and risk chiefs would leave the bank.
  • The Swiss lender has been the hardest hit by the collapse late last month of Archegos, a U.S. family investment firm, suffering a major loss in its unit that services hedge funds.
  • Chief Executive Thomas Gottstein will stay in his job, but Chief Risk Officer Lara Warner is leaving the bank Tuesday and head of investment banking Brian Chin will depart at the end of April.
  • To shore up capital, Credit Suisse said it would suspend a share buyback program and pay a reduced dividend through a mix of capital and retained earnings. Mr. Gottstein and the rest of the executive board won’t receive any 2020 bonuses. Mr. Rohner is giving up part of his pay.

China Asks Banks to Curtail Credit for Rest of Year – Bloomberg, 4/6/2021

  • China’s central bank asked the nation’s major lenders to curtail loan growth for the rest of this year after a surge in the first two months stoked bubble risks, according to people familiar with the matter.
  • At a meeting with the People’s Bank of China on March 22, banks were told to keep new advances in 2021 at roughly the same level as last year, said the people, asking not to be identified as the matter is private.
  • Some foreign banks were also urged to rein in additional lending through so-called window guidance recently after ramping up their balance sheets in 2020, one of the people said.
  • The comments give further detail to what the central bank stated publicly after the meeting, when it said it asked representatives of 24 major banks to keep loan growth stable and reasonable.
  • In 2020, banks doled out a record 19.6 trillion yuan ($3 trillion) of credit, with about a fifth directed to inclusive financing such as small business loans.

EasyJet CEO criticizes testing requirements in Britain’s travel restart plan – Reuters, 4/6/2021

  • The chief executive of British airline easyJet criticized some of the government’s plans to restart travel, saying COVID-19 tests should not be required for passengers travelling to low-risk destinations.
  • Britain’s airlines and travel industry were left disappointed by Prime Minister Boris Johnson’s warning on Monday that it was too soon to say when international holidays could resume, meaning the re-opening could be pushed later than the current date of May 17.
  • EasyJet chief executive Johan Lundgren said on Tuesday that there were a lot of details missing from the previous day’s announcement.
  • He said the government’s proposed traffic light system of ranking low risk countries as green and higher risk countries as red made sense, but travel to green countries should not require passengers to take two COVID-19 tests.
  • He said the cost of COVID-19 tests sometimes exceeded easyJet’s ticket prices. “That means that you wouldn’t open up international travel for everyone, you would open up for those who could afford to pay it,” he said.

Norwegian Cruise to start Caribbean, Greek Isles trips in July – Reuters, 4/6/2021

  • Norwegian Cruise Line Holdings said on Tuesday it would begin sailing outside the United States from the Caribbean and Greek Isles in July, restarting trips after a year-long hiatus brought on by the COVID-19 pandemic.
  • The company had appealed to federal health authorities on Monday to allow sailing from U.S. ports following the U.S. Centers for Disease Control and Prevention’s (CDC) latest guidance to the industry, including the need for COVID-19 vaccinations.
  • Norwegian Cruise will initially offer seven-day cruises to the Greek Isles from Athens (Piraeus), Greece beginning July 25, and seven-day Caribbean itineraries originating in Montego Bay, Jamaica and from La Romana, Dominican Republic in August.

Factmonster – TODAY in HISTORY

  • Joseph Smith and five others organized the Church of Jesus Christ of Latter-day Saints in Fayette, New York. (1830)
  • The Battle of Shiloh in the American Civil War began. (1862)
  • First modern Olympic Games opened in Athens, Greece. (1896)
  • S. declared war on Germany and entered World War I. (1917)

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