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Daily Market Report | Apr. 19, 2021

Stocks Tick Down After Dow, S&P 500 Records – Wall Street Journal, 4/19/2021

  • U.S. stocks slipped Monday, backing away from the records they notched at the end of last week.
  • The Dow Jones Industrial Average fell 182 points, or 0.5%, to 34018. The S&P 500 lost 0.6% and the Nasdaq Composite declined 1.2%.
  • Bitcoin stabilized around $55,000 after plunging almost 12% over the weekend, according to data from CoinDesk. Turkey’s central bank said Friday it would ban the use of cryptocurrencies as a form of payment.
  • On the earnings front, International Business Machines is expected to report after the close. Other giant companies including Procter & Gamble are scheduled to post results later in the week.
  • Overseas, the pan-continental Stoxx Europe 600 inched down 0.1%.
  • In Asia, most major benchmarks ticked up. The Shanghai Composite Index climbed 1.5% for its best day in over three weeks. Hong Kong’s Hang Seng added 0.5%. However, India’s benchmark stock index fell 1.8% as Covid-19 cases continued to climb.
  • Tesla declined 5.4% after two men died in a Tesla vehicle that crashed into a tree Saturday.
  • Peloton fell 8.2% after a federal safety agency said over the weekend that people with young children or pets shouldn’t use the connected-fitness company’s treadmills.

Covid-19 Live Updates: More Than a Quarter of Americans Fully Vaccinated – Wall Street Journal, 4/19/2021

  • More than a quarter of the U.S. population has now been fully vaccinated against Covid-19, and half of adults have received at least one shot, but the average number of newly reported cases each day remains high.
  • Some 25.4% of those in the U.S. have been fully vaccinated, according to data from the Centers for Disease Control and Prevention. Around 50.4% of Americans aged 18 and older, and 39.5% of the total population, have received at least one vaccine dose, the CDC data show.
  • Newly reported cases declined from a day earlier, with 42,018 reported for Sunday after 52,373 were reported for Saturday, according to the latest data compiled by Johns Hopkins University. The number of new cases recorded each day tends to be lower at the beginning of the week, as fewer people are tested and many states don’t report data on weekends.
  • The number of deaths reported for Sunday also fell from a day earlier, to 313 from 680, according to Johns Hopkins data. Not all states report new data daily.
  • Dr. Anthony Fauci, President Biden’s chief medical adviser and the director of the National Institute of Allergy and Infectious Diseases, said Sunday that he expects the J&J vaccine to return to use by Friday.

Coca-Cola Sales Rebound as Covid-19 Vaccine Rollout Expands – Wall Street Journal, 4/19/2021

  • Coca-Cola said its sales volume in March returned to pre-pandemic levels as the rollout of Covid-19 vaccines allows more people to eat out again.
  • This year, Coke expects high-single-digit percentage growth in organic revenue, which excludes currency swings and acquisitions or divestitures. On that basis, Coke’s revenue grew 6% in the quarter ended April 2.
  • The company’s unit-case volume, or the number of 24 8-ounce servings of finished beverages sold, was flat for the quarter compared with the same period a year earlier. Its volume fell by 6% in the U.S. and by 2% in Europe, the Middle East and Africa but grew by 9% in Asia.
  • The company said its profit for the quarter fell 19% to $2.25 billion.
  • Separately on Monday, Coca-Cola said it plans to list Coca-Cola Beverages Africa as a separate, publicly traded company.

Harley’s renewed focus on touring bikes drives upbeat forecast – Reuters, 4/19/2021

  • Harley-Davidson raised its full-year forecast for sales growth on Monday as it turns its focus on more-expensive touring bikes, while cutting its exposure to less-profitable markets, sending its shares up 15%.
  • The company’s revenue rose to $1.42 billion from about $1.30 billion.
  • The Milwaukee, Wisconsin-based company said retail sales, a measure of demand at its dealerships, surged 30% to 32,800 motorcycles in North America in the first quarter, its first increase in six years.
  • Retail sales in Europe, Harley’s second-biggest market after the United States, slumped 36% to 4,900 motorcycles in the quarter due to the company’s decision to stop selling its smaller and less profitable Street or Sportster motorcycles as well as pandemic-induced shipping delays.
  • A new tariff ruling by the European Union is likely to further hit demand from June, as all Harley products would now be subject to a 56% tariff.
  • On an adjusted basis, Harley earned $1.68 per share for the quarter ended March 28, beating analysts’ average estimate of 88 cents per share, according to IBES data from Refinitiv.
  • Despite the challenges, Harley still raised its forecast for 2021 motorcycle business revenue growth to a range of 30% to 35%, up from its prior expectation of 20% to 25%.

Nvidia’s $40 Billion Deal to Buy Arm Under U.K. National Security Investigation – Wall Street Journal, 4/19/2021

  • The U.K. government said it would probe Nvidia’s $40 billion deal to buy British chip-designer Arm from SoftBank Group, over possible national security issues, adding new regulatory scrutiny to the proposed deal.
  • British Digital Secretary Oliver Dowden on Monday asked the country’s antitrust agency to investigate the merger’s national-security implications and deliver a report by July 30.
  • The digital secretary can clear the deal with or without conditions, or nix it.
  • The national-security review comes on top of the agency’s previously announced plans to probe the deal on antitrust grounds.
  • Nvidia executives expected a possible U.K. national-security review when it agreed to buy Arm and factored that risk into what it has said is an 18-month timeline for completing the deal, a person close to Nvidia said.

Lithium Miners Ink $3 Billion Merger as Demand for Electric Vehicles Booms – Wall Street Journal, 4/19/2021

  • Orocobre agreed to buy rival Australian miner Galaxy Resources in an all-stock deal that would create a $3 billion miner and one of the world’s biggest producers of lithium, a commodity used in batteries for electric vehicles and other high-tech products.
  • Orocobre runs the Olaroz lithium operation in northern Argentina, while Galaxy runs the Mt. Cattlin mine in Australia and has projects under development in Argentina and Canada.
  • If the deal consummates, the new miner would be the fifth-largest global lithium miner, the companies said.

Fatal Tesla Crash in Texas Believed to Be Driverless – Wall Street Journal, 4/19/2021

  • Two men died after a Tesla vehicle that authorities believe was operating without anyone in the driver’s seat crashed into a tree Saturday night north of Houston.
  • One of the men was in the front passenger’s seat and the other was in the back seat of the Tesla, which was traveling at high speed along a curve before it hit a tree around 11:25 p.m. local time, Harris County Precinct 4 Constable Mark Herman said in an interview.
  • It took emergency responders about four hours and roughly 32,000 gallons of water to put out the fire that engulfed the electric vehicle, Constable Herman said.
  • Autopilot has come under heightened scrutiny in recent months after a series of crashes involving Tesla vehicles. NHTSA has launched more than two dozen advanced driver-assistance-related investigations into crashes involving Tesla vehicles.

Elon Musk’s Satellite Internet Project Is Too Risky, Rivals Say – Wall Street Journal, 4/19/2021

  • Elon Musk’s internet satellite venture has spawned an unlikely alliance of competitors, regulators and experts who say the billionaire is building a near-monopoly that is threatening space safety and the environment.
  • The Starlink project, owned by Mr. Musk’s Space Exploration Technologies or SpaceX, is authorized to send some 12,000 satellites into orbit to beam superfast internet to every corner of the Earth. It has sought permission for another 30,000.
  • Now, rival companies such as Viasat, OneWeb Global, Hughes Network Systems and Boeing are challenging Starlink’s space race in front of regulators in the U.S. and Europe. Some complain that Mr. Musk’s satellites are blocking their own devices’ signals and have physically endangered their fleets.
  • The critics’ main argument is that Mr. Musk’s launch-first, upgrade-later principle, which made his Tesla electric car company a pioneer, gives priority to speed over quality, filling Earth’s already crowded orbit with satellites that may need fixing after they launch.

Union Appeals Amazon Election in Alabama, Says Company Violated Laws – Wall Street Journal, 4/19/2021

  • The union that unsuccessfully sought to organize an Amazon.com location in Alabama has filed challenges over the vote, saying the company violated legal restrictions throughout the election.
  • In objections filed with the National Labor Relations Board, attorneys representing Retail, Wholesale and Department Store Union allege that Amazon intimidated and threatened employees into voting against unionizing.
  • The union cited meetings that the company held with workers and a mailbox installed outside of the warehouse. More than 70% of workers who cast ballots in the election voted against joining the RWDSU.
  • The union alleges that Amazon, through company representatives, threatened employees with the loss of jobs or closing of the warehouse as well as possible loss of compensation and benefits, if the union were approved.

Stock Shorts Collapse as No Hedge Fund Wants ‘Head Ripped Off’ – Bloomberg, 4/19/2021

  • Wall Street bears battered by the Reddit crowd earlier this year have yet to regain their gumption, even with stocks at records and valuations near two-decade highs.
  • The median short interest in members of the S&P 500 sits at just 1.6% of market value, near a 17-year low, according to Goldman Sachs.
  • In Europe, a short-covering frenzy has sent bearish bets collapsing like never before in Morgan Stanley data.
  • Elevated valuations would seem to provide ammo for short sellers. The S&P 500 is trading at around 23 times next year’s earnings, near the highest since 2000. Compared with the 10-year Treasury yield, the benchmark is offering the thinnest risk premium since 2010.
  • But bearish bets are proving painful. A Goldman Sachs basket of the most-shorted stocks has surged three times as much as the broader U.S. market in 2021, partly because a horde of Robinhood traders stampeded into a few short targets last quarter.

Shell, Exxon Look to Profit From Capturing Customers’ Carbon Emissions – Wall Street Journal, 4/19/2021

  • Oil companies have for decades made money by extracting carbon from the ground. Now they are trying to make money putting it back.
  • Energy giants such as Exxon Mobil and Royal Dutch Shell are pushing carbon capture and storage—where carbon is gathered and buried underground—as part of a drive to reduce both their own and their customers’ emissions.
  • Exxon has said it plans to form a new business unit to commercialize carbon capture and storage, forecasting it could become a $2 trillion market by 2040.
  • Chevron has formed partnerships on storage projects, while BP is codeveloping storage projects in the U.K. and Australia.
  • Last month, Shell, Total SE and Equinor AS A launched a joint venture to store carbon in a rock formation thousands of feet beneath the seabed off the coast of Norway. The state-backed Northern Lights project is set to be the first time companies outside the oil industry will be able to pay to have their carbon gathered and stored.

Top Republican Says Senate GOP Could Be Open to Smaller Infrastructure Bill – Wall Street Journal, 4/19/2021

  • A senior Republican senator said he and his colleagues could support an infrastructure bill of around $800 billion, underscoring GOP interest in a bipartisan fix for the nation’s aging roads and patchy broadband service.
  • The comments by Sen. John Cornyn (R., Texas) on Sunday signal that Senate Republicans are seeking a compromise on infrastructure, ahead of President Biden’s meeting with lawmakers on Monday to push his own $2.3 trillion plan.
  • Asked on Fox News Sunday whether he could support an infrastructure package of around $800 billion, Mr. Cornyn said: “There is a core infrastructure bill that we could pass…So let’s do it and leave the rest for another day and another fight.”
  • Sen. Chris Coons (D., Del.), also on Fox News Sunday, said that Democrats should work to find a bipartisan agreement with Republicans on elements of the White House infrastructure plan before pivoting to a second, broader package that Democrats pass along party lines.
  • A major Republican criticism of the Biden administration’s framework is that it includes some funding, such as $400 billion for caring for senior and disabled Americans, that they don’t believe should be considered infrastructure.

Exclusive: Fearing foreclosure crisis, U.S. watchdog cracks down on mortgage servicers – Reuters, 4/19/2021

  • The U.S. consumer watchdog is scrutinizing mortgage servicers’ compliance with pandemic relief programs amid concerns struggling homeowners are not getting the help they need to avoid foreclosures, or are being discriminated against, said a dozen people with knowledge of the regulatory effort.
  • The Consumer Financial Protection Bureau (CFPB) crackdown by its policy, supervision and enforcement divisions could result in stiff penalties for those mortgage servicers found to have hurt borrowers, the regulatory officials, lawyers and industry executives said.
  • In recent weeks, the agency has sent data requests to mortgage servicers, usually a company or a bank that processes mortgage repayments. It is seeking data on how they are handling mortgage holiday or “forbearance” programs and whether the temporary debt relief is likely to get borrowers back on their feet, said three people with direct knowledge of the matter, some of whom asked to remain anonymous because aspects of the discussions are private.
  • The agency has also opened probes into a handful of mortgage servicers over their handling of forbearance requests, three other people with knowledge of the matter said.

EUROPE & WORLD

Why Covid-19 Vaccination in Poorer Nations Has Slowed, Posing Global Risks – Wall Street Journal, 4/19/2021

  • Efforts to vaccinate the poorest countries against Covid-19 have slowed to a trickle, leaving many with weakened defenses against the coronavirus just as the weight of the pandemic shifts from developed to developing nations.
  • An initiative backed by the World Health Organization and rich countries to supply free vaccines to 92 low- and middle-income countries recently slashed the number of shots it plans to ship by the end of May.
  • That initiative, called Covax, will deliver 145 million doses instead of about 240 million because India, its main supplier, has largely stopped exporting shots as it fights a surge in cases at home.
  • That is widening an already huge vaccination gap between rich and poor countries. While more than 200 million doses have been administered in the U.S., Covax has so far supplied fewer than 41 million of its planned two billion doses by the end of 2021.
  • Officials at the Africa Centers for Disease Control and Prevention and the WHO suggested recently that governments might consider giving priority to a first shot for as many people as possible, even if it means delaying second doses and despite a lack of clear data on how efficacy could drop without a booster.

Foreign Buying of Chinese Government Bonds Stalls – Wall Street Journal, 4/19/2021

  • A huge run-up in foreign holdings of Chinese government bonds has stalled, with international investors hitting pause on their purchases as China’s interest-rate advantage over the U.S. has shrunk.
  • International ownership of Chinese government debt declined slightly in March to the equivalent of $313 billion, according to the China Central Depository & Clearing. Holdings fell about 1% to 2.04 trillion yuan, from 2.06 trillion yuan a month earlier.
  • That was the first drop in foreign investors’ positions since February 2019. It came in a month when the yuan weakened more than 1% against the dollar, after strengthening more than 9% from June through February.
  • Meanwhile, prices for U.S. Treasury notes and other global government debt have been falling, pushing yields higher. That has shrunk the extra yield that China’s sovereign debt offers over international rivals.
  • This spread has narrowed to about 1.6 percentage points, after topping 2.2 percentage points throughout the second half of last year, data from FactSet and brokerage Tullett Prebon shows.

U.K. Draws Up Plans to Stop Breakaway European Soccer League – Bloomberg, 4/19/2021

  • The U.K. government is drawing up plans to prevent the creation of a European breakaway soccer league comprising the world’s richest clubs, after Prime Minister Boris Johnson condemned the idea.
  • The European Super League proposal, which would mark the sport’s biggest overhaul in decades in Europe and make elite teams wealthier, has been roundly criticized by fans and politicians.
  • There’s growing pressure on Johnson to intervene after his Conservative Party promised a “fan-led review” of soccer governance in its 2019 election manifesto that it has yet to deliver.
  • Johnson said soccer clubs have a strong link with their fans and their local communities, and this this should continue. Six of the founder clubs of the proposed league are from the U.K.: Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur.

Alexei Navalny Hospitalized in Russia Three Weeks Into Hunger Strike – Wall Street Journal, 4/19/2021

  • Jailed opposition politician Alexei Navalny was hospitalized Monday, weeks after beginning a hunger strike, as the Kremlin brushed off warnings from the U.S. of repercussions if the activist were to die while in prison.
  • His hospitalization came a day after his supporters called for large-scale demonstrations to demand his release after doctors with ties to the opposition leader cited medical test results they said showed he was at risk of imminent renal failure and a possible heart attack.
  • The U.S. warned on Sunday that there would be consequences if Mr. Navalny died while incarcerated.

Factmonster – TODAY in HISTORY

  • Naturalist Charles Darwin, developer of the theory of evolution, died. (1882)
  • The United States went off the gold standard. (1933)
  • The siege at Waco, Texas, ended when FBI moved into the Branch Davidian compound with tear gas and cult members set fire to the compound killing over 80 people. (1993)

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