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Daily Market Report | May 19, 2021

Covid-19 Live Updates: Newly Reported U.S. Cases Below 30,000 for Fourth Straight Day – Wall Street Journal, 5/19/2021

  • Newly reported coronavirus cases in the U.S. edged down, while federal health officials said hundreds of thousands of people between the ages of 12 and 15 have been vaccinated.
  • The U.S. reported 27,851 new cases for Tuesday, according to the latest data compiled by Johns Hopkins University.
  • Tuesday’s figure was slightly lower than Monday’s revised total of 28,634, and marked the fourth day in a row that new cases were under 30,000. Not all states report data on new cases daily.
  • Hospitalizations have also been edging lower, with the latest data posted by the U.S. Department of Health and Human Services showing 30,651 Covid-19 patients in hospitals across the country.
  • The U.S. reported 857 Covid-19 fatalities for Tuesday, as the total death toll topped 587,200, according to Johns Hopkins data.
  • With 275.5 million vaccine doses administered, about 37.5% of the U.S. population has been fully vaccinated and 47.7% has received at least one dose, CDC data show. More than 47% of American adults are now fully vaccinated.

Target Books Another Sales Surge – Wall Street Journal, 5/19/2021

  • Target reported robust quarterly sales and a jump in store visits, a sign the retailer continues to grab market share even as consumer buying habits change during the pandemic.
  • Total revenue rose 23% to $24.2 billion.
  • Comparable sales, those from stores and digital channels operating for at least 12 months, rose 23% in the quarter ended May 1 compared with the same period last year.
  • Apparel sales rose more than 60%, Target said, and sales of home goods and hardlines, such as appliances, rose more than 30%. Sales of food and home essentials, big winners last year, increased a few percentage points.
  • Overall sales through digital channels increased 50% in the most recent quarter, a slowdown from the same period last year when sales grew 141%. Store visits rose 17%, year over year.
  • At Target, quarterly earnings were $2.1 billion, compared with $284 million a year ago, lifted by strong sales of higher margin items such as apparel and store brands.
  • For the second quarter of 2021, Target expects comparable-sales growth in the mid-to-high single digits.

Take-Two beats quarterly sales and profit estimates; shares up – Reuters, 5/19/2021

  • Take-Two Interactive Software Inc reported a quarterly profit and sales on Tuesday that beat analysts’ estimates, as stay-at-home gamers during the pandemic boosted demand for the video game maker’s popular franchises such as “Grand Theft Auto” and “NBA 2K”.
  • On an adjusted basis, the game publisher’s revenue stood at $784.5 million, in the fourth quarter ended March 31, beating analysts’ average estimate of $664 million, according to IBES data from Refinitiv.
  • Excluding items, the company earned 94 cents per share during the quarter, above Wall Street’s estimates of 67 cents per share, according to Refinitiv IBES data.
  • The company sees full-year adjusted sales between $3.2 billion and $3.3 billion, while analysts expect $3.51 billion.

Lowe’s signals stronger than expected home improvement demand after sales jump – Reuters, 5/19/2021

  • Lowe’s said on Wednesday demand for home improvement products was more buoyant than its expectations despite vaccine rollouts after reporting a near 26% jump in quarterly same-store sales.
  • Total net sales at Lowe’s rose 24.1% to $24.42 billion in the first quarter, beating estimates of $23.86 billion, while net earnings of $3.21 per share also topped expectations of $2.62.
  • A surge in lumber prices also helped same-store rise 25.9% in the first quarter ended April 30, beating analysts’ estimates for a 19.2% increase, according to IBES data from Refinitiv.
  • The boom was expected to slow following speedy vaccinations and easing of COVID-19 curbs, but the stimulus checks in March boosted demand, Lowe’s said.

TJ Maxx parent beats estimates as Americans return to stores – Reuters, 5/19/2021

  • TJX reported better-than-expected quarterly results on Wednesday as mass COVID-19 vaccinations and the easing of restrictions encouraged more Americans to shop at its brick-and-mortar stores.
  • While store closures weighed on its first-quarter results, overall net sales more than doubled from a year earlier to $10.09 billion in the 13 weeks ended May 1.
  • Same-store sales rose by 16% at the chain’s outlets that remained open during the first quarter from the pre-pandemic level recorded in the comparable period in fiscal 2020.
  • TJX earned 44 cents per share, beating estimates of 31 cents.
  • TJX said about 300 stores of its stores in Canada and Europe were temporarily closed due to government mandates as of Wednesday. It expects its Canadian stores to be shuttered for 17% of the second quarter.
  • TJX said second-quarter comparable-store sales trends at its outlets that were open remain similar to the previous quarter.

Southwest Airlines trims second-quarter cash burn forecast – Reuters, 5/19/2021

  • Southwest Airlines on Wednesday trimmed its average core cash burn forecast by $1 million per day for the second quarter, as improving demand for leisure travel is expected to more than offset higher fuel prices.
  • Southwest said it had seen improvements in leisure passenger travel demand and bookings for May and June this year, adding that based on current bookings, leisure fare levels in June are nearing June 2019 levels.
  • The company also said it was continuing to see “modest, consistent improvements” in business passenger demand and bookings, though it still lagged leisure travel trends.
  • The company now estimates its average core cash burn, excluding changes in working capital, to be in the range of $1 million to $3 million per day in the quarter, compared with its previous estimation in the range of $2 million to $4 million per day.
  • Southwest added it now expects capacity to increase about 87% in the second quarter from the year-ago quarter, compared with its previous forecast of a rise of about 90%, primarily due to changes in its service plans.
  • The Dallas, Texas-based carrier also raised its estimates for fuel costs in the second quarter to be between $1.90 and $2.00 per gallon, from its previous forecast in the range of $1.85 to $1.95 per gallon.

SPAC Selloff Bruises Individual Investors – Wall Street Journal, 5/19/2021

  • Shares of special-purpose acquisition companies and firms they have taken public are tumbling, punishing individual investors who piled into the once-hot sector.
  • The Defiance Next Gen SPAC Derived Exchange-Traded Fund, which tracks companies that have gone public through SPACs along with SPACs that have yet to do any deals, has fallen about 30% in the past three months and recently hit a six-month low.
  • The reversal highlights the risks that come with popular speculative trades. It is occurring as investors retreat from technology stocks amid fears that rising inflation will force the Federal Reserve to end its easy-money policies more quickly than anticipated.
  • Those concerns make wagers on rapidly growing companies less appealing.

Oil Extends Drop After First U.S. Supply Rise in Three Weeks – Bloomberg, 5/19/2021

  • Oil extended losses after an increase in U.S. crude inventories added to concerns around the prospect of more Iranian oil returning to the market under a potential revival of the nuclear deal.
  • Futures in New York tumbled as much as 5.2% on Wednesday. Domestic oil stockpiles grew by 1.32 million barrels last week, the largest increase since mid-March, according to a U.S. government report.
  • Traders had been expecting a much smaller inventory rise.
  • Prices were already under pressure as broader markets tumbled on inflation concerns and as talks continue on the Iran nuclear deal.
  • Iran said it will soon export oil from a new port, while the Persian Gulf country’s deputy foreign minister told state television he sees “good progress” being made in the talks. Still, some key issues remain, he said.

Readout of Fed meeting may highlight potential policy dilemma – Reuters, 5/19/2021

  • The Federal Reserve on Wednesday will release a readout of its April policy meeting, an event already overrun by data showing disappointing jobs growth and a spike in inflation that has kicked a debate about whether the U.S. central bank is off course into high gear.
  • Comments from Fed officials since the April 27-28 meeting have indicated that if anything the employment data from April cemented the view that it was still too early to discuss changes to the Fed’s $120 billion in monthly bond purchases.
  • Discussion of raising the central bank’s benchmark overnight interest rate from the current near-zero level is even further down the road.
  • The minutes of the Federal Open Market Committee’s meeting last month’s are due to be released at 2 p.m. EDT and are expected to show at most one or two Fed officials urging quicker action to reduce the monetary policy support rolled out last spring to help the economy through the recession triggered by the coronavirus pandemic.

Biden, Yellen Seek Backing for $2.3 Trillion Infrastructure Package – Wall Street Journal, 5/19/2021

  • President Biden and Treasury Secretary Janet Yellen promoted the administration’s infrastructure and tax plans as vital for the U.S. to compete globally, as the White House and Republican lawmakers continued to pursue a deal to improve the nation’s bridges, roads and broadband internet.
  • The proposal—one of two economic plans designed to invest in American workers and infrastructure—calls for fixing roads and bridges, as well as expanding broadband internet access and boosting funding for research and development. To help pay for the package, he has proposed raising the corporate tax rate to 28% from 21% and increasing taxes on U.S. companies’ foreign earnings.
  • Mr. Biden has said he is open to a compromise. A group of Republican senators met with administration officials Tuesday on an alternative GOP infrastructure plan.
  • Republicans have rejected the White House’s proposed tax increases, and lawmakers said they discussed various alternatives for financing the package at Tuesday’s meeting.
  • Speaking at a U.S. Chamber of Commerce event, Ms. Yellen sought to win support from business leaders, saying that the proposal would put U.S. companies on a better footing to compete overseas.

Centrist Democrats’ Departures Challenge Party’s Control of House – Wall Street Journal, 5/19/2021

  • More centrist Democrats are choosing not to run for re-election in the House and others are considering bowing out, creating headaches for local party officials trying to find replacements just as redistricting is introducing more uncertainty into the 2022 races.
  • Rep. Cheri Bustos (D., Ill.), who led the House Democratic campaign arm in 2020 when the party unexpectedly lost seats, is one of the lawmakers calling it quits. Last month, she said won’t seek re-election, citing a need for a career change, sending a shock wave through her district in northwestern Illinois.
  • In addition to Ms. Bustos, Democratic Reps. Filemon Vela of Texas, Charlie Crist of Florida, Tim Ryan of Ohio and Ann Kirkpatrick of Arizona have announced they won’t seek re-election.
  • Democrats currently have a 219-211 majority in the House, with five vacancies. Altogether, five Democrats and six Republicans currently in office have said they don’t plan to run for re-election in 2022.

Senate Democrat proposes $52 billion for U.S. chips production, R&D – Reuters, 5/19/2021

  • U.S. Senate Democratic Leader Chuck Schumer unveiled revised bipartisan legislation late Tuesday to approve $52 billion to significantly boost U.S. semiconductor chip production and research over five years.
  • The emergency funding proposal will be included in a more than 1,400-page revised bill the Senate is taking up this week, as first reported by Reuters on Friday, to spend $120 billion on basic U.S. and advanced technology research to better compete with China.
  • The proposal includes $49.5 billion in emergency supplemental appropriations to fund the chip provisions that were included in this year’s National Defense Authorization Act, but which require a separate process to garner funding.
  • Supporters of funding note the U.S. had a 37% share of semiconductors and microelectronics production in 1990; today just 12% of semiconductors are manufactured in the United States.

Steel industry groups urge Biden to keep tariffs in place after EU truce – Reuters, 5/19/2021

  • U.S. steel industry groups and the United Steelworkers union on Wednesday urged President Joe Biden to keep in place the steel tariffs imposed three years ago, saying that lifting them now would undermine the industry’s viability.
  • In a letter to Biden just days after his chief trade negotiator struck a temporary tariff truce with the European Union, the groups argued that the “Section 232” national security tariffs imposed by former president Donald Trump have been a success, leading to $15.7 billion in new capacity investments.
  • “Global steel overcapacity has only increased during the pandemic, and past economic crises have led to devastating import surges as other nations dumped their excess steel into the U.S. market.”

U.S. to waive sanctions on firm, CEO behind Russia’s Nord Stream 2 pipeline -source – Reuters, 5/19/2021

  • The Biden administration will waive sanctions on the company behind Russia’s Nord Stream 2 pipeline to Europe and its chief executive, with the U.S. State Department set to deliver a report as early as Wednesday, a source familiar with the plans told Reuters on Wednesday.
  • The department’s review, required by Congress, concludes that Nord Stream 2 AG and CEO Matthias Warnig, an ally of Russian President Vladimir Putin, engaged in sanctionable activity but that it was in the U.S. national interest to waive the sanctions, the source said.
  • The source said the administration under Democratic President Joe Biden still opposed the Nord Stream 2 pipeline but felt it was important to send a signal about its strategic commitment to rebuilding relations with Germany, which were badly damaged under former Republican President Donald Trump.


European Union Set to Open Borders to Vaccinated Tourists – Wall Street Journal, 5/19/2021

  • The European Union took a step toward opening its borders to vaccinated tourists, a move that likely means Americans and other non-Europeans will be allowed to visit the continent this summer.
  • The decision, taken Wednesday by ambassadors from the 27 EU member countries, must still be formally approved by national leaders, which could come as soon as tomorrow.
  • People who have been fully vaccinated with shots approved by the World Health Organization or the EU’s medicines regulator will be allowed in.
  • That includes the three vaccines being used in the U.S.—those made by Pfizer, Moderna and Johnson & Johnson —as well as ones manufactured by AstraZeneca and Sinopharm, a Chinese state-owned company.
  • The EU is testing “green certificates” that would certify that a traveler has been fully vaccinated, tested negative for Covid-19 or recently had the virus.
  • The certificates, which will be rolled out for some countries in June, can be displayed by travelers either on a smartphone app or as a printed document.

Asia Suffers Outbreaks Where Covid-19 Had Seemed Beaten – Wall Street Journal, 5/19/2021

  • For months, Covid-19 seemed to be all but gone from parts of Asia, where some of the world’s most successful battles to contain the coronavirus were waged. But several places are now struggling with new outbreaks.
  • Taiwan, which last year had a stretch of more than eight months without any locally transmitted cases, set a single-day record with 333 of them on Monday. Vietnam, which had also squashed the curve, reported its highest case count a day earlier.
  • Singapore banned dining-in at restaurants, closed schools and put limits on social gatherings after reporting double-digit increases in domestic cases for several days. Rapid transmission in Thailand’s prisons led to a record 9,600 new cases on Monday—surpassing the total number reported in 2020.
  • Apart from Singapore, where more than a fifth of the population is fully vaccinated, inoculation levels across much of Southeast Asia are in the low single digits.
  • Taiwan has administered shots to only about 220,000 of its nearly 24 million people, and on Saturday it suspended self-paid vaccinations—which were available to people who needed to travel abroad for work, education or medical treatment—to give priority to front-line workers. beats market expectations as COVID-19 boom persists – Reuters, 5/19/2021

  • China’s’s first-quarter revenue beat Wall Street estimates on Wednesday, as growth remained robust in the domestic e-commerce sector following the COVID-19 pandemic.
  • Net revenue at, China’s largest e-commerce company by revenue, rose 39% to 203.2 billion yuan ($31.57 billion) in the quarter ended March 31, topping analysts’ average estimate of 191.83 billion yuan, according to IBES data from Refinitiv.
  • Sales in its product segment, which includes online retail sales, rose nearly 35% to 175.28 billion yuan in the quarter.
  • Excluding items, posted a profit of 2.47 yuan per American depository share (ADS), compared with analysts’ expectations of 2.26 yuan.

Singapore Airlines posts record $3.2 bln annual loss, to issue convertible bonds – Reuters, 5/19/2021

  • Singapore Airlines on Wednesday posted its second-consecutive annual loss, which widened to a record S$4.27 billion ($3.20 billion), and said it would issue S$6.2 billion of convertible bonds to help weather the coronavirus crisis.
  • Annual revenue fell 76.1% to S$3.82 billion in the financial year ended March 31, with strong cargo revenues not enough to offset an almost 98% fall in passenger numbers.
  • The loss for the 12 months ended March 31 was worse than the average S$3.27 billion forecast by eight analysts, according to Refinitiv, and included S$2 billion of impairments largely on the 45 older planes surplus to requirements.
  • The airline said it expected passenger capacity to rise to 28% of pre-pandemic levels by June, but much of that is due to strong freight demand sustaining the number of flights. It filled just 13.4% of passenger seats in the financial year ended March 31.
  • The airline said it would issue S$6.2 billion of mandatory convertible bonds that were an optional part of a S$15 billion rescue package led by its majority shareholder, state investor Temasek Holdings last year.

Canadian Consumer Prices Climb at Fastest Pace in a Decade – Bloomberg, 5/19/2021

  • Consumer prices in Canada climbed at the fastest rate in a decade, outpacing estimates and potentially fueling concerns that the country — much of which is still in lockdown — is entering a period of persistent inflation.
  • Annual inflation accelerated to 3.4% in April, compared with 2.2% in March, Statistics Canada reported Wednesday in Ottawa.
  • That exceeded economist predictions of a 3.2% annual pace. On a monthly basis, inflation rose 0.5% versus the 0.2% economists were expecting.
  • Core inflation — often seen as a better measure of underlying price pressures — rose to 2.1% from 1.9% in March. That’s the highest since 2012.

German business less optimistic on 2021 GDP growth than government – Reuters, 5/19/2021

  • Germany’s DIHK Chambers of Industry and Commerce said on Wednesday it slightly raised its growth forecast for Europe’s largest economy to 3% this year after its recent survey pointed to improved business morale over the past three months.
  • The DIHK’s updated growth forecast compares with its previous estimate of 2.8% projected in February and is based on the latest findings of the association’s survey among more than 27,000 companies from various sectors of the economy.
  • The DIHK forecast is less optimistic than the government’s projection of 3.5% GDP growth this year. The German economy shrank by 4.8% last year due to the pandemic.
  • The DIHK survey chimes with the findings of the smaller, but more frequent Ifo business sentiment survey that showed how the third wave of COVID-19 infections and supply bottlenecks are complicating the economic recovery.

Factmonster – TODAY in HISTORY

  • Anne Boleyn, the second wife of King Henry VIII, was beheaded. (1536)
  • British author and soldier, T. E. Lawrence, also known as “Lawrence of Arabia,” died from injuries sustained in a motorcycle crash. (1935)
  • Jacqueline Kennedy Onassis died in New York. (1994)

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