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Daily Market Report | June 08, 2021

Stocks Waver, With Tech Extending Gains – Wall Street Journal, 6/8/2021

  • A jump in technology shares pushed the Nasdaq Composite index up 0.1% Tuesday morning, pointing to a third consecutive day of gains for the index of technology and growth stocks.
  • The broad S&P 500 index and the Dow Jones Industrial Average both slipped.
  • On Monday, the blue-chip index briefly climbed into record territory before ending the session down 0.4%.
  • In corporate news, Tesla rose 0.2% after data from the China Passenger Car Association showed sales of electric cars in China surged by 177% in May. The electric car maker sold over 33,000 vehicles that were made in China last month.
  • Shares of Clover Health Investments soared 79% after the healthcare company emerged as the latest darling for retail traders on Reddit forums, building on its 32% gain Monday.
  • Other so-called meme stocks rose, with GameStop up about 17% and AMC Entertainment Holdings rising more than 3%.
  • In bond markets, the yield on the benchmark 10-year U.S. Treasury note fell to 1.536%, from 1.570% Monday. Bond yields drop when prices climb.
  • Overseas, the pan-continental Stoxx Europe 600 rose 0.4%, putting it on course to close at a fresh all-time high.
  • In Asia, stock indexes mostly edged lower by the close of trading. Japan’s Nikkei 225 slid 0.2%. In Hong Kong, the Hang Seng Index was relatively unchanged from the prior day. China’s Shanghai Composite Index fell 0.5%.

Global Wealth Gap Likely to Widen as Major Economies Power Recovery, World Bank Says – Wall Street Journal, 6/8/2021

  • Global inequality is likely to widen this year as a small number of major economies power the fastest recovery in 80 years while many poorer countries struggle to return to pre-pandemic income levels, the World Bank said.
  • The global economy is set to grow by 5.6% this year, up from a January forecast of 4.1%, marking the fastest recovery from five post-World War II recessions, the bank said Tuesday in its semiannual Global Economic Prospects report.
  • While about 90% of advanced economies are expected to regain their pre-pandemic per capita income levels by 2022, only about one-third of emerging-market and developing nations are likely to do so, the bank said, in part because of uneven access to Covid-19 vaccines.
  • The Covid-ravaged global economy shrank an estimated 3.5% in 2020, the bank said. While the rebound is forecast to continue next year with growth of 4.3%, the level of output will remain 2% below pre-pandemic projections.
  • Growth in the U.S., the world’s largest economy, is projected at 6.8% this year, up from the bank’s January forecast of 3.5%. Growth is forecast at 8.5% in China, the second-largest economy, 8.3% in India and 4.2% in the euro area.
  • By contrast, the bank cut its growth forecast for low-income countries—those with an annual gross national income per capita of $1,035 or less—to 2.9% this year from an earlier projection of 3.4%. Many of those countries are in sub-Saharan Africa.
  • The bank forecasts the global inflation rate to increase to 3.9% this year from 2.5% during 2020.

Internet Outage Hits Major Websites – Wall Street Journal, 6/8/2021

  • Dozens of websites in the U.S. and Europe flicked back on after being offline for roughly an hour early Tuesday, following an internal glitch at a major cloud-services provider.
  • Sites including the U.K. government’s main public-services portal and several major U.S. and European news outlets, such as the New York Times and Le Monde, were inaccessible to at least some users for about an hour, beginning around 6 a.m. Eastern Time.
  • Fastly, the operator of a content-delivery network service that many websites use to help speed the loading of their webpages for users, appears to have been at the root of the problems.
  • Joshua Bixby, Fastly’s chief executive, reached in the middle of the outage, said the company was investigating the issue, but that it wasn’t attack-related.

Tesla’s China Sales Bounce Back Despite Consumer Backlash – Wall Street Journal, 6/8/2021

  • Tesla’s sales in China rebounded in May after a short slump, a boost for the electric-vehicle maker as it looks to overcome its first major stumble in one of its most important markets.
  • Tesla delivered 21,936 cars to Chinese customers in May, the China Passenger Car Association said Tuesday, almost double the number sold the month before, but still well below the near 36,000 it shipped in March.
  • Tesla faced a backlash in April when one of its customers staged a protest at Auto Shanghai, China’s premier auto-industry expo. Images of Zhang Yazhou standing atop a Model 3, berating the company for allegedly selling her a vehicle with defective brakes before being dragged away by security guards, went viral on Chinese social media.
  • Tesla had outpaced its Chinese rivals in the first three months of the year, selling 69,280 vehicles.
  • In comparison, BYD sold 53,380 passenger EVs in the quarter, while the U.S.-listed startup trio of Li Auto, NIO and XPeng collectively sold 45,979.
  • But in April and May Tesla fell behind. BYD sold 56,715 EVs during the two-month period, while the three startups sold a combined 34,528 cars—more than Tesla’s 33,607.

Ford’s Maverick Truck Offers Alternative to Hulking Pickups – Wall Street Journal, 6/8/2021

  • Pickup trucks in the U.S. have trended for years toward the bigger, brawnier and more expensive. Now, Ford Motor is reversing course, with plans to sell a diminutive hybrid truck with a price tag—and gas mileage—similar to that of a compact car.
  • Ford on Tuesday revealed the Maverick, a pickup truck with a body comparable in size to a compact SUV, such as a Ford Escape. Its starting price of $19,995 will make it the least-expensive vehicle in Ford’s U.S. lineup when it goes on sale this fall.
  • The nation’s No. 2 auto maker is betting that some people who own sedans or small sport-utility vehicles would like the versatility of having a flatbed, but don’t have the budget or garage space for a big, gas-guzzling truck, such as Ford’s F-150 or midsize Ranger pickup.
  • The Maverick will be built on the same basic frame as Ford’s Focus car. The frame also underpins the company’s popular Escape SUV and the new Bronco Sport, released last year.
  • The vehicle will come standard with a hybrid system, which saves fuel by combining a gas engine with a small battery pack and electric motor. Ford says the system will deliver about 40 miles per gallon in city driving.

Southwest Airlines orders 34 more 737 MAX aircraft from Boeing – Reuters, 6/8/2021

  • Southwest Airlines said on Tuesday it had ordered 34 new Boeing 737 MAX 7 aircraft to receive in 2022, as the U.S. airline prepares for a vaccine-driven recovery in travel demand.
  • The move brings the carrier’s total orders for the MAX 7 to 234.
  • Southwest said it expected revenue to continue to improve in June, driven mainly by leisure travel.
  • It also tightened its second-quarter average core cash burn forecast to between $1 million and $2 million per day, compared with the previous range of $1 million to $3 million per day.

Apple in talks with CATL, BYD over battery supplies for its electric car – Reuters, 6/8/2021

  • Apple is in early-stage talks with China’s CATL and BYD, about the supply of batteries for its planned electric vehicle, four people with knowledge of the matter said.
  • The discussions are subject to change and it is not clear if agreements with either CATL or BYD will be reached, said the people who declined to be named as the discussions are private.
  • Apple is in favor of using lithium iron phosphate batteries that are cheaper to produce because they use iron instead of nickel and cobalt which are more expensive, the four people said.
  • People familiar with the matter have previously said Apple’s planned EV could include its own breakthrough battery technology. It was not immediately clear if the discussions with CATL and BYD involved Apple’s own technology or designs.

Apple’s Tim Cook Kicks Off WWDC by Doubling Down on Privacy – Wall Street Journal, 6/8/2021

  • A year after angering software developers with new privacy features aimed at making it harder to track iPhone users’ digital footprints, Apple Inc. on Monday doubled down with even more changes that will roil the digital-advertising industry.
  • Among the many updates to popular apps, such as Maps, Wallet and Weather, the Cupertino, Calif., technology company said it would introduce later this year additional features to help users control how their online data is used by third-parties.
  • Those changes include allowing users to shut off the ability of marketers to see if and when an email is opened through Apple’s Mail app—which could have a large effect on campaigns from businesses and publishers—and to hide IP address information to prevent tracking web usage on the Safari browser.
  • Apple also said premium iCloud users will be able to access the internet with a feature called Private Relay that would block network providers from using IP addresses and web usage to create a user profile for tracking.

U.S. Retrieves Millions in Ransom Paid to Colonial Pipeline Hackers – Wall Street Journal, 6/8/2021

  • U.S. authorities have recovered millions of dollars in digital currency paid to the hackers who hit a major East Coast fuel pipeline with a ransomware attack last month, in a law-enforcement operation that officials said demonstrated progress undermining criminals’ ability to disrupt American commerce and critical infrastructure for profit.
  • Investigators seized about 64 bitcoin, valued at roughly $2.3 million, from a virtual wallet—the alleged proceeds from the ransom hack carried out by a suspected Russian-based criminal gang on Colonial Pipeline Co., the Justice Department said.
  • “The extortionists will never see this money,” Stephanie Hinds, acting U.S. attorney for the Northern District of California, where the seizure warrant was obtained, told reporters. “This case demonstrates our resolve to develop methods to prevent evildoers from converting new methods of payment into tools and extortion for undeserved profits.”
  • The ransom amounted to 75 bitcoin, a person familiar with the payment said, of which 64 was recovered. Because the cryptocurrency fluctuates dramatically in value, the dollar value recovered was only a little more than half the dollar value of the ransom payment.

Most Coal Plants in Biggest U.S. Grid Are Becoming Money-Losers – Bloomberg, 6/8/2021

  • Most of the coal plants that feed the biggest U.S. power grid will soon no longer be economic to run after prices in a key auction plunged to the lowest in 11 years.
  • Of the 44 coal-fired power plants on the grid operated by PJM Interconnection LLC, 32 will be unprofitable in 2023, the first full year that will be affected by results released last week for its capacity auction.
  • That represents 38 gigawatts of capacity out of 47 total gigawatts supplied by coal, and is quadruple the number of money-losing coal facilities now, according to a BloombergNEF analysis on Monday.
  • More than 8 gigawatts of coal capacity failed to clear the auction after prices tumbled to $50 a megawatt-day for the year starting in June 2022, down from $140 a megawatt-day in the last auction, in 2018.

U.S. Trade Deficit Narrowed in April – Wall Street Journal, 6/8/2021

  • The U.S. trade deficit narrowed in April from a record level in March as disruptions in global supply chains and a slowdown in consumer spending contributed to a drop in imports.
  • The deficit in trade of goods and services shrank by 8.2% to a seasonally adjusted $68.9 billion in April, the Commerce Department said Tuesday, compared with the record $75 billion gap in March.
  • Imports fell 1.4% to $273.9 billion, while exports grew 1.1% to $205 billion.
  • While imports took a step back in April, exports climbed, led by a $1.4 billion rise in civilian aircraft, and a lift to a range of commodities, including a $1 billion increase in crude oil and gains in shipments of other petroleum products.

Small business optimism slips on hiring, inflation worries -NFIB – Reuters, 6/8/2021

  • U.S. small-business confidence edged lower last month, the first decline in four months, as a nationwide labor shortage and inflation worries weighed on business owners’ economic outlook, according to a survey released on Tuesday.
  • The National Federation of Independent Business (NFIB) Optimism Index fell 0.2 point to a reading of 99.6 in May after three straight monthly increases. Five of the 10 index components improved, three declined and two were unchanged.
  • A net 27% of businesses plan to create new jobs in the next three months, up 6 points from April and a record high. Last week, the trade group said in its monthly jobs report that a record-high 48% of small-business owners reported unfilled job openings in May on a seasonally adjusted basis, up from 44% in April.
  • The quality of labor ranked as businesses’ “single most important problem,” with 26% of respondents selecting it from among 10 issues, near the survey high of 27%. Some 57% of respondents said they had few or no qualified applicants for open jobs, up from 54% in April.
  • Businesses in the NFIB survey also flagged inflation as a worry, and a record 43% plan to increase prices in the next three months.

U.S. consumers sour on housing market’s buying conditions – Reuters, 6/8/2021

  • A record-low percentage of U.S. consumers believe now is a good time to buy a home, with worries about surging prices and a small supply of houses on the market outweighing improved sentiment about their jobs and income, a survey from home financing giant Fannie Mae showed on Monday.
  • The percentage of consumers who said it is a good time to buy a home declined in May to 35% from 47%, Fannie Mae said in its monthly survey of the U.S. housing market.
  • This reading, the lowest since Fannie Mae began the survey about a decade ago, marked the second straight monthly decline and represented a drop of 18 percentage points since March.
  • In comparison, the percentage of consumers indicating that now is a bad time to purchase a home increased to 56% from 48% last month.
  • The data is part of Fannie Mae’s Home Purchase Sentiment Index (HPSI), which increased by 1.0 point to 80.0 last month and is up 12.5 points from a year earlier. The index’s record high was 93.8 in August 2019.

U.S. Job Openings Reached Record Level This Spring – Wall Street Journal, 6/8/2021

  • Available jobs in the U.S. climbed further above pre-pandemic levels last month following a record surge earlier in the spring, a sign of strong demand for workers—with leisure and hospitality sectors showing the most growth in openings.
  • Indeed data showed the number of overall postings at the end of May was 27% above February 2020’s, from up 23% at the end of April. The gains were led by growing help-wanted ads for jobs in food service, hospitality and tourism and loading and stocking, the latter reflecting the continued strength of online shopping.
  • Job postings at food-services businesses were 25% above pre-pandemic levels at the end of May. As recently as March, the sector has less demand for labor than in early 2020.
  • Job postings in hospitality and tourism nearly returned to pre-pandemic levels last month, ending May 3.6% below the February 2020 level.

U.S., Taiwan to Launch Trade Talks – Wall Street Journal, 6/8/2021

  • The Biden administration is launching trade and investment talks with Taiwan, advancing U.S. ties with Taipei and likely adding to frictions with the island’s nemesis, Beijing.
  • Secretary of State Antony Blinken told a House committee on Monday about the plans for trade talks. “We are engaged in conversations with Taiwan, or soon will be—on some kind of framework agreement,”
  • Mr. Blinken said in response to a question from Rep. Andy Barr (R., Ky.) during the virtual hearing.
  • Mr. Blinken declined to elaborate and referred questions about details to Katherine Tai, the U.S. trade representative, who wasn’t at the hearing. A spokesman for Ms. Tai’s office said that strengthening relations with Taiwan is important, though “we have no meetings to announce at this time.”

Biden administration sets up ‘strike force’ to go after China on trade – Reuters, 6/8/2021

  • The United States will target China with a new “strike force” to combat unfair trade practices, the Biden administration said on Tuesday, as it rolled out findings of a review of U.S. access to critical products, from semiconductors to electric-vehicle batteries.
  • The “supply chain trade strike force,” led by the U.S. trade representative, will look for specific violations that have contributed to a “hollowing out” of supply chains that could be addressed with trade remedies, including toward China, senior administration officials told reporters.
  • Officials also said the Department of Commerce was considering initiating a Section 232 investigation into the national security impact of neodymium magnet imports used in motors and other industrial applications, which the United States largely sources from China.
  • A senior official said the United States had faced unfair trade practices from “a number of foreign governments” across all four of the supply chains covered in the initial review, including government subsidies and forced intellectual property transfers.

EUROPE & WORLD

Euro zone economic dip milder than expected in first quarter – Reuters, 6/8/2021

  • The euro zone economy contracted by much less than expected in the first quarter of the year, revised data from the EU’s statistics office showed, with a buildup of inventories and investment offset by reduced consumer spending.
  • Eurostat said gross domestic product in the 19 countries sharing the euro contracted 0.3% quarter-on-quarter for a 1.3% year-on-year decline. These compared with estimates three weeks ago of respectively -0.6% and -1.8%.
  • Italy grew marginally, against a previous estimate of a dip, and France dipped, against an earlier estimate of growth.
  • Germany was very slightly weaker, while a number of smaller countries were more positive.
  • Eurostat said rising inventories added 0.7 percentage points to the overall quarterly figure in the January-March period and investment and trade each added another 0.1 points.
  • Falling household consumption, hit by pandemic lockdowns including of shops across Europe, subtracted 1.2 points and government spending was neutral.
  • Eurostat said also employment fell 0.3% quarter-on-quarter in January-March and was down 1.8% year-on-year.

New Israeli Coalition Government Set to Be Sworn In Sunday – Wall Street Journal, 6/8/2021

  • An eight-party coalition aimed at unseating Israeli Prime Minister Benjamin Netanyahu is set to be sworn in on Sunday, as a key right-wing lawmaker rebuffed the embattled leader’s overtures to defect from the new government.
  •  Yariv Levin, the speaker of the Knesset and a member of Mr. Netanyahu’s Likud party, said Tuesday that the new coalition government will face a vote of confidence in the parliament before being sworn in on June 13.
  • Mr. Levin a day earlier had pushed back against the new coalition’s request for a confidence vote this Wednesday, saying the parliament had until June 14 to convene for the vote.
  • The defection of just one or two lawmakers could prevent the new coalition from mustering a majority and force Israel’s fifth election since 2019.

Qatar Airways halts A350 deliveries after jet surface problem – Reuters, 6/8/2021

  • Qatar Airways said on Tuesday the surface below the paint on some of its Airbus A350s was deteriorating faster than expected and insisted it would not take more deliveries of the carbon-composite widebody jet until the problem was resolved.
  • The Gulf carrier has fallen out with the European planemaker, warning last week that Airbus faced “industrial repercussions” if it failed to resolve the dispute, while until now giving few details of the discussions. read more
  • The airline has grounded some A350s “until the condition and root cause can be understood and corrected,” the spokesperson said, without disclosing how many aircraft were affected.

Factmonster – TODAY in HISTORY

  • Andrew Jackson, the 7th president of the United States, died in Tennessee. (1845)
  • James Earl Ray, Martin Luther King, Jr.’s, assassin, was arrested. (1968)
  • President Reagan became the first American president to address a joint session of Britain’s Parliament. (1982)
  • Tony Blair and his Labour Party won a second term, overwhelming the opposition at the polls. (2001)

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