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Daily Market Report | Apr. 13, 2021

Stocks Wobble After J&J Vaccine Halted, Inflation Uptick – Wall Street Journal, 4/13/2021

  • U.S. stocks wobbled Tuesday as investors tried to gauge the impact of a halt in rolling out Johnson & Johnson vaccines and an uptick in inflation.
  • Health authorities recommended a pause in using the Johnson & Johnson vaccine following reports of blood clotting.
  • The Food and Drug Administration and the Centers for Disease Control and Prevention are reviewing data involving six reported cases of clotting.
  • Fresh data also showed that U.S. consumer prices picked up sharply in March as the economic recovery gained momentum, partly reflecting higher gasoline prices.
  • The Labor Department reported that the consumer-price index jumped 2.6% in the year ended March.
  • In bond markets, the yield on the 10-year Treasury note ticked down to 1.666%, from 1.674% on Monday. Yields rise when bond prices fall. The 10-year yield shot up as high as 1.749% at the end of March, from 0.915% near the start of the year.
  • Bitcoin rose more than 4% to a record, trading above $63,000 apiece, according to data from CoinDesk.
  • Coinbase, the largest U.S. cryptocurrency exchange, is planning to go public on Wednesday.
  • In Asia, most major benchmarks rose. Japan’s Nikkei 225 Index added 0.7%, and Hong Kong’s Hang Seng Index advanced 0.2%.
  • The Shanghai Composite Index retreated 0.5% after data showed that Chinese exports in March had risen less than economists had expected, resulting in a smaller trade surplus than anticipated.

Covid-19 Live Updates: U.S. Newly Reported Cases Rise – Wall Street Journal, 4/13/2021

  • Newly reported coronavirus cases in the U.S. rose, while a study found that a new variant of the virus that has spread widely throughout the country isn’t deadlier than older strains.
  • The U.S. reported 70,234 new cases for Monday, according to the latest data compiled by Johns Hopkins University, up from 46,378 on Sunday.
  • The seven-day average, which helps smooth out differences in data reporting, was 68,960 on Monday, while the 14-day average was 66,824, according to a Wall Street Journal analysis of data compiled by Johns Hopkins University.
  • Hospitalizations have also edged up recently, with more than 43,700 Covid-19 patients in hospitals around the country, according to the latest data posted by the U.S. Department of Health and Human Services.
  • The nation reported 467 Covid-19 fatalities for Monday, and the total death toll now stands at more than 562,600, according to Johns Hopkins data.
  • Vaccination efforts across the country continue to gain steam, and an average of 3.2 million doses were administered each day over the past week, according to a Wall Street Journal analysis of Centers for Disease Control and Prevention data.
  • As concerns remain high over new coronavirus variants, a new study has found that the variant first identified in the U.K. spreads more easily than older strains but doesn’t lead to more severe disease among hospitalized patients.
  • People infected late last year with the variant, known as B.1.1.7, had more virus in their bodies than patients infected with older strains, a sign the newer variant is more infectious, according to the study published online Monday by the medical journal The Lancet Infectious Diseases.

U.S. Seeks to Pause J&J Covid-19 Vaccine Use After Rare Blood-Clot Cases – Wall Street Journal, 4/13/2021

  • U.S. health authorities recommended a pause in the use of Johnson & Johnson’s Covid-19 vaccine in order to investigate rare but severe cases of blood clots.
  • The U.S. Food and Drug Administration and the U.S. Centers for Disease Control and Prevention announced the move Tuesday, after finding that six women between the ages of 18 and 48 years who got the vaccine had developed blood clots.
  • J&J said Tuesday it is aware of an extremely rare disorder involving people with blood clots in combination with low platelets in a small number of people who received its vaccine. J&J said it is working with health authorities and medical experts.
  • The specter of blood clots could add to concerns about the safety of the shots, though vaccines from Pfizer and its partner BioNTech SE and from Moderna have proven relatively safe so far.

Nvidia expects first-quarter sales to exceed $5.3 billion – Reuters, 4/13/2021

  • Nvidia’s first-quarter revenue will be above its earlier forecast of $5.3 billion, the chipmaker said on Monday, as it benefits from strong demand for chips that power data centers and cryptocurrency mining.
  • “While our fiscal 2022 first quarter is not yet complete, Q1 total revenue is tracking above the $5.30 billion outlook,” Chief Financial Officer Colette Kress said in a statement.
  • Nvidia’s unit that supports cryptocurrency mining is now expected to report sales of $150 million in the quarter, up from previous forecast of $50 million, the company said.

American Airlines cash flow turns positive in March – Reuters, 4/13/2021

  • American Airlines said on Tuesday it turned cash flow positive in March on an adjusted basis, helped by a recovery in demand for domestic travel.
  • Excluding daily payment of $8 million towards regular debt and severance packages, it was cash flow positive, the company said in a regulatory filing, adding it burned about $4 million of cash per day in March compared with $30 million in the previous quarter
  • The U.S. airline expects its average daily cash burn rate for the first three months to be about $27 million per day compared to its previous forecast of $30 million, and end the quarter with about $17.3 billion in total available liquidity.
  • The Texas-based company expects revenue to plunge about 62% compared with the same period in 2019, and to post a loss of about $2.7 billion to $2.8 billion, excluding financial assistance under the U.S. payroll support program for airlines.

Intel in talks to produce chips for automakers within six to nine months -CEO – Reuters, 4/13/2021

  • The chief executive of Intel told Reuters on Monday the company is in talks to start producing chips for car makers to alleviate a shortage that has idled automotive factories.
  • Chief Executive Officer Pat Gelsinger said the company is talking to companies that design chips for automakers about manufacturing those chips inside Intel’s factory network, with the goal of producing chips within six to nine months.
  • Gelsinger earlier on Monday met with White House officials to discuss the semiconductor supply chain.
  • Gelsinger did not name the component suppliers but said that the work could take place at Intel’s factories in Oregon, Arizona, New Mexico, Israel or Ireland.

Nvidia Plans New Chip to Compete With Intel in Data-Center Market – Wall Street Journal, 4/13/2021

  • Graphics-chip giant Nvidia is increasing the competitive pressure on Intel with plans to start selling central-processing units to serve the booming data-center market.
  • Nvidia said Monday its first processor for data centers would operate 10 times faster than existing chips. Dubbed Grace, after the famed computer scientist Grace Hopper, the chip is based on technology developed by Arm, a U.K. chip designer that Nvidia is in the process of buying for around $40 billion.
  • Mr. Huang said Monday that Nvidia was also looking to bring Arm-based products into new markets such as cloud-computing and autonomous systems. Grace, which Nvidia said would be available in early 2023, was among a series of announcements made as part of a company event.

OPEC Sees Oil Demand Boosted by Stimulus and Vaccine Programs – Wall Street Journal, 4/13/2021

  • Some of the world’s wealthiest nations are grappling with stubborn coronavirus rates, but a brightening outlook and historic stimulus packages will boost economic activity and oil demand this year, the Organization of the Petroleum Exporting Countries said Tuesday.
  • In its closely-watched monthly market report, OPEC increased its 2021 global oil demand forecast by 100,000 barrels a day and raised its forecast for global economic growth by 0.3 percentage points to 5.4%.
  • The cartel said its increased demand forecast was prompted by forecasts of a better-than-expected second half of the year, thanks to “stimulus programs and a further easing of Covid-19 lockdown measures, amid an acceleration in the vaccination rollout,” largely in the club of wealthy nations known as the Organization for Economic Cooperation and Development.

Americans Have Too Much Toilet Paper. Finally, Sales Slow. – Wall Street Journal, 4/13/2021

  • After a year in which toilet-tissue shortages left consumers scrambling for squares, sales are plummeting to below pre-pandemic levels.
  • Bath-tissue sales in January fell more than 4% from the same period a year earlier, before the spread of Covid-19 spurred Americans to load up on staples from toilet paper to sanitary wipes, according to figures from NielsenIQ.
  • The decline, which comes even though legions of Americans continue to work and attend school from home, indicates last year’s stockpiling is starting to have an effect on sales.
  • Demand for toilet paper shot up in the outbreak’s initial weeks, doubling in the second week of March, and remained elevated throughout most of 2020. Americans spent more than $11 billion on toilet paper last year, up from $9 billion in a typical year, according to NielsenIQ.

IMF offers rosier view on Asia, warns of Fed fallout on markets – Reuters, 4/13/2021

  • The International Monetary Fund offered a more upbeat view on Tuesday on Asia’s economic outlook than six months ago, but warned a faster-than-expected rise in U.S. interest rates could disrupt markets by triggering capital outflows from the region.
  • The IMF expects Asia’s economy to expand 7.6% this year, up from an 6.9% increase projected in October, as advanced economies such as Japan, Australia and South Korea enjoy solid growth thanks to robust U.S. and Chinese demand.
  • The region’s outlook, however, is bound with risks including the fallout from U.S. fiscal and monetary policy, Ostry said.
  • “If U.S. yields rise faster than markets expect, or if there is miscommunication about future U.S. monetary policy, adverse spillovers through financial channels and capital outflows, as during the 2013 taper tantrum, could present challenges by compromising macro-financial stability,” Ostry said.

U.S. consumer prices post biggest gain in over 8-1/2 years – Reuters, 4/13/2021

  • U.S. consumer prices rose by the most in more than 8-1/2 years in March as increased vaccinations and massive fiscal stimulus unleashed pent-up demand, kicking off what most economists expect will be a brief period of higher inflation.
  • The consumer price index jumped 0.6% last month, the largest gain since August 2012, after rising 0.4% in February.
  • Gasoline prices soared 9.1%, accounting for nearly half of increase in the CPI last month.
  • That followed a 6.4% increase in February.
  • Food prices edged up 0.1% last month.
  • The cost of food consumed at and away from home also rose 0.1%.
  • Economists polled by Reuters had forecast the CPI advancing 0.5%.
  • In the 12 months through March, the CPI surged 2.6%, a figure that was distorted by a pandemic-related decline in prices in March 2020. That effect will begin to fade within several months, helping explain why Federal Reserve policy makers see current price pressures as temporary rather than something more dangerous to the economy.
  • That was the largest gain since August 2018 and followed a 1.7% increase in February.
  • Excluding the volatile food and energy components, the CPI increased 0.3% after nudging up 0.1% in February.
  • The core CPI increased 1.6% on a year-on-year basis after rising 1.3% in February.

Growing Share of Americans See Risk of Highest Inflation in Years – Bloomberg, 4/13/2021

  • The contingent of U.S. consumers who see inflation exceeding 4% in the year ahead rose to 44% last month — the most since September 2013 — according to results of the Federal Reserve Bank of New York’s monthly Survey of Consumer Expectations published Monday.
  • Consumer expectations for home, gas, and rent price changes all rose in March to the highest levels on record in data going back to 2013, the survey results showed.
  • Many consumers — in particular those over the age of 60 and those with annual incomes over $100,000 — said they expected to increase household spending over the next 12 months by the most in several years, a prospect Fed officials have warned could add to temporary price pressures as the coronavirus pandemic recedes and the U.S. economy reopens.
  • Overall, the median expectation was that inflation would be 3.2% over the coming year, up from 3.1% in the February survey.

U.S. Budget Deficit Widened to a Record $1.7 Trillion for Six Months – Wall Street Journal, 4/13/2021

  • The U.S. budget deficit grew to a record $1.7 trillion in the first half of the fiscal year as a third round of stimulus payments sent federal spending soaring last month.
  • The deficit was $660 billion last month, 454% wider than it was in the same month a year ago. Revenue rose 13% to $268 billion, while spending increased 161% to $927 billion—the third-highest total on record, after June and April of last year.
  • Outlays from October through March rose to $3.4 trillion, an increase of 45%. Receipts rose 6% to $1.7 trillion.
  • Despite a $4 trillion expansion in debt last year, a 25% increase, interest payments on that debt declined 8%. The yield on the 10-year Treasury note fell as low as 0.52% last summer, and at roughly 1.67% on Monday it remains far below its average in recent years.

EUROPE & WORLD

Germany Mulls First Nationwide Lockdown – Wall Street Journal, 4/13/2021

  • Germany could be headed for its first nationwide lockdown as infection numbers continue to increase amid a slow vaccine rollout.
  • A new bill adopted by Chancellor Angela Merkel’s cabinet on Tuesday would allow the government to order confinement measures if numbers pass certain infection thresholds—a prerogative so far held by the country’s 16 state governments.
  • The country registered 10,810 new cases on Monday, according to the Robert Koch Institute for infectious diseases, and is back to levels of daily infections last seen in early January and close to Germany’s all-time highs of late December 2020.

Factmonster – TODAY in HISTORY

  • Apollo 13 announced “Houston, we’ve got a problem,” when an oxygen tank burst on the way to the Moon. (1970)
  • Tiger Woods became the youngest person to win the Masters Tournament and the first of African descent to win a major golf title. (1997)

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