US FINANCIAL MARKET
Stocks Wobble After Dow’s 550-Point Rally – Wall Street Journal, 6/22/2021
- U.S. stocks wobbled Tuesday as some economically sensitive sectors of the market pulled back.
- The S&P 500 was up 0.1% in morning trading, while the Dow Jones Industrial Average dipped 35 points, bringing the blue-chip index to 33842.
- The Nasdaq Composite, meanwhile, rose 0.1%, as some technology stocks scored small gains.
- Mr. Powell will testify before Congress Tuesday, detailing the central bank’s response to the pandemic.
- Prepared remarks released a day earlier suggest Mr. Powell will tell lawmakers that job growth should pick up in coming months and temporary inflation pressures should ease as the economy continues to recover from the effects of the pandemic.
- He is likely to take questions on the outlook for inflation and the labor market, which may offer fresh insights into the potential pace of interest-rate hikes and the easing of the Fed’s bond-buying program.
- In bond markets, the yield on the 10-year U.S. Treasury note edged up to 1.505%, from 1.481% on Monday.
- The 30-year yield, which has been particularly volatile in recent days, ticked up to 2.137% from 2.103% on Monday.
- Overseas, the Stoxx Europe 600 index was also flat in recent trading.
- Japan’s Nikkei 225 index jumped 3.1% by the close of trading. In China, the Shanghai Composite Index added 0.8%.
- Hong Kong’s Hang Seng Index edged down 0.6%.
Vivendi Shareholders Approve Spinoff of Universal Music – Wall Street Journal, 6/22/2021
- Vivendi shareholders approved the French media conglomerate’s plan to spin off its Universal Music Group unit, bringing the world’s largest music company a step closer to becoming its own public entity.
- With more than 99% approval, shareholders backed the plan to distribute 60% of Universal’s shares to existing Vivendi shareholders and to list the company on the Euronext Amsterdam stock exchange.
- Vivendi executives said the listing would take place on Sept. 21.
- Universal, home to stars including Taylor Swift, Billie Eilish, Queen and the Beatles, commands some 40% market share in the domestic recorded music business—30% globally—and operates the world’s second-largest music publishing company, which last year bought Bob Dylan’s entire songwriting catalog.
- Over the weekend, Vivendi reached an agreement for a 10% investment in Universal by William Ackman’s Pershing Square Tontine Holdings, valuing the company at €35 billion, or about $40 billion.
Nonbank Lenders Are Dominating the Mortgage Market – Wall Street Journal, 6/22/2021
- Americans took out more mortgages than ever before in 2020. Most of them didn’t come from banks.
- Nonbank mortgage lenders in the U.S. issued 68.1% of all mortgages originated in 2020, up from 58.9% in 2019, according to industry research firm Inside Mortgage Finance.
- That is their highest market share on record and their biggest yearly gain since 2014.
- Seven of the 10 biggest U.S. mortgage lenders were nonbanks at the end of 2020, according to the research firm.
- Lenders of all stripes originated a record $3.83 trillion in home loans in 2020, according to the Mortgage Bankers Association.
- At Rocket’s Quicken Loans, the nation’s largest mortgage lender, loan volume more than doubled in 2020, compared with an increase of less than 10% at runner-up Wells Fargo, according to Inside Mortgage Finance.
Blackstone Bets $6 Billion on Buying and Renting Homes – Wall Street Journal, 6/22/2021
- Blackstone Group has agreed to buy a company that buys and rents single-family homes in a $6 billion deal that’s a sign Wall Street believes the U.S. housing market is going to stay hot.
- The giant investment firm has reached a deal to acquire Home Partners of America, according to people familiar with the matter. Home Partners owns more than 17,000 houses throughout the U.S., which it bought, rents out and offers its tenants the chance to eventually buy.
- For all their recent activity, big institutional investors own about 300,000 U.S. homes, or only 2% of single-family rental homes, according to a report by New York-based financial firm Amherst Pierpont Securities.
- About 85% of the single-family rental market is owned by investors with 10 or fewer properties, the firm said.
Google Faces EU Antitrust Probe of Alleged Ad-Tech Abuses – Wall Street Journal, 6/22/2021
- The European Union opened a formal antitrust investigation into allegations that Google abuses its leading role in the advertising-technology sector, the most wide-ranging case yet to look at that pillar of the tech giant’s business.
- The European Commission, the EU’s top antitrust enforcer, said Tuesday that its investigation, which has been under way informally since at least 2019, will look at a broad array of allegedly anticompetitive business practices around the Alphabet unit’s brokering of advertisements and sharing of user data with advertisers across websites and mobile apps—one of the newest areas of antitrust scrutiny for the company.
- Some of the EU’s investigation will cover similar ground to a case filed last year against Google by a group of U.S. states led by Texas. Similar areas include Google’s allegedly favoring its own ad-buying tools in the advertising auctions it runs.
- But the EU probe will also cover complaints that haven’t yet been the subject of formal inquiries anywhere, including Google’s alleged exclusion of competitors from brokering ad buys on Google-owned video site YouTube.
OPEC+ Discusses Output Hike in Preparation for Next Meeting – Bloomberg, 6/22/2021
- OPEC+ is discussing whether to further boost production at next week’s meeting as the oil market looks increasingly tight.
- Moscow is considering making a proposal that the group should ease a global supply deficit by increasing output, according to Russian officials familiar with the matter. Other OPEC+ nations are also discussing a potential supply hike in August, although specific numbers haven’t been mentioned, said a delegate.
- Saudi Arabia, the de-facto OPEC+ leader alongside Russia, so far hasn’t given any clear signal on the position it will take at next week’s talks.
- The kingdom has typically been cautious about rolling back the cuts, with Energy Minister Prince Abdulaziz bin Salman saying last week he wants to see clear evidence of a strong demand recovery before restoring more halted production.
U.S. Airports to Receive $8 Billion to Help Pay Bills as Travel Recovers – Wall Street Journal, 6/22/2021
- U.S. airports are set to receive $8 billion in government grants to help them emerge from the coronavirus pandemic that decimated travel last year.
- The grants announced by the Federal Aviation Administration Tuesday, which were included in the $1.9 trillion stimulus package approved in March, will help ease financial burdens until travel fully recovers, airports say.
- Airports can use the fresh round of funds to cover operating costs, to pay debt service, or for new expenses related to preventing the spread of disease, like installing air filters or stepping up cleaning practices.
- Airports must also commit to keeping 90% of employees as a condition of accepting the funds.
US ECONOMY & POLITICS
US ECONOMY & POLITICS
U.S. Existing-Home Prices Hit Record High in May – Wall Street Journal, 6/22/2021
- The median home price topped $350,000 for the first time in May as a shortage of properties and low interest rates drove double-digit monthly increases this spring.
- Existing-home sales fell 0.9% in May from April to a seasonally adjusted annual rate of 5.8 million.
- May sales rose 44.6% from a year earlier, when home sales dropped due to Covid-related lockdowns.
- The median existing-home price rose 23.6% in May from a year earlier to $350,300, a record high, NAR said.
- The annual price appreciation was the strongest in data going back to 1999.
- Homes are selling quickly. The typical home that sold in May spent 17 days on the market, matching the record low reached in April, NAR said.
- Buyers with limited cash for down payments are struggling the most to compete.
- Half of existing-home buyers in April who used mortgages put at least 20% down, according to a NAR survey.
- There were 1.23 million homes for sale at the end of May, up 7% from April and down 20.6% from May 2020.
- At the current sales pace, there was a 2.5-month supply of homes on the market at the end of May.
Elections-Law Vote to Test Democrats’ Unity Amid GOP Opposition – Wall Street Journal, 6/22/2021
- The Democratic-controlled Senate plans to hold a test vote on sweeping election-law revisions Tuesday, after weeks of intraparty wrangling over the measure and calls from the party’s progressive wing to force it through without Republican support.
- The vote Tuesday, which is expected to fall short of the 60 senators needed to open debate, will serve as a test of Democratic unity on election-related issues.
- Most Senate Democrats have backed legislation dubbed S-1 to change everything from the way campaigns are financed to how districts are drawn and elections are conducted, but they are telegraphing that they would support a narrower set of changes proposed by Sen. Joe Manchin (D., W.Va.).
- Some Democrats have said the party shouldn’t accept defeat and that the voting-rights bill is so important the Senate should change chamber rules to end the legislative filibuster and allow the bill to pass by simple majority.
- But several Democratic centrists, most prominently Mr. Manchin and Arizona Sen. Kyrsten Sinema, have rejected ending the filibuster, though some have suggested ways to weaken it.
- In an opinion article published in the Washington Post late Monday, Ms. Sinema reiterated her opposition to scotching the filibuster, saying it would undercut bipartisanship and could lead to “wild swings between opposing policy poles.”
Labor, green groups urge White House to reject a ‘watered-down’ infrastructure deal – Reuters, 6/22/2021
- Leaders of environmental and labor groups – two of President Joe Biden’s biggest supporters – urged the White House and Democratic congressional leaders on Tuesday to reject any bipartisan infrastructure deal that lacks strong provisions to tackle climate change and strengthen unions.
- The BlueGreen Alliance, whose partners include some of the country’s biggest environmental groups and labor unions, said in a letter its members were “troubled by recent proposals” that are “watered down.”
- It called on Democrats to strive for an infrastructure package that captures the main elements of Biden’s proposed $1.7 trillion package.
- The letter was signed by the heads of organizations ranging from the United Steelworkers, Service Employees International Union, Sierra Club and Natural Resources Defense Council.
New York City Voters Go to Polls to Pick Next Mayor – Wall Street Journal, 6/22/2021
- New Yorkers headed to the polls Tuesday to determine the next mayor of New York City and the winners in dozens of other primary races, but many contests may not be called for weeks.
- The primaries were the biggest test yet of the city’s new ranked-choice voting system, which allows voters to list up to five candidates in a race in preferential order.
- The Democratic mayoral primary has 13 candidates on the ballot, while the Republican race has only two.
- If no candidate gets a majority of votes, then the ranked-choice voting system kicks in. However, a winner won’t be declared for weeks.
EUROPE & WORLD
Euro-Area Consumer Confidence Well Above Pre-Crisis Level – Bloomberg, 6/22/2021
- Consumer confidence in the euro area improved to well above its pre-pandemic levels in June as coronavirus infection rates fell and restrictions began to be lifted across the bloc.
- The region is on track for a strong rebound in the second quarter, with the European Central Bank foreseeing economic growth of 4.6% in 2021.
- ECB President Christine Lagarde said this week that monetary and fiscal stimulus must continue “well into the recovery.”
China to Keep Covid-19 Border Restrictions for Another Year – Wall Street Journal, 6/22/2021
- Beijing is planning to keep its pandemic border restrictions in place for at least another year as officials fret over the emergence of new variants and a calendar of sensitive events, according to people familiar with the matter, despite a coronavirus vaccination campaign that has topped one billion doses.
- The provisional timeline of the second half of 2022 was set during a mid-May meeting of the country’s cabinet, or State Council, attended by officials from China’s Foreign Ministry and National Health Commission, among other government bodies, one of the people said.
- The cautious attitude is being driven by a pair of events that officials are eager to have go off without a hitch next year: the Winter Olympics in February and a once-a-decade power transition within the ruling Chinese Communist Party toward the end of the year.
- At the Communist Party Congress, Chinese leader Xi Jinping is widely expected to seek an additional term beyond the customary two-term limit.
Tokyo Olympics to Allow Spectators at Summer Games – Wall Street Journal, 6/21/2021
- The Summer Olympics in Tokyo will include up to 10,000 Japanese spectators at each event, organizers said, despite advice by leading doctors that the Games would be safer without crowds.
- Monday’s decision clears up the final major uncertainty about the Games ahead of the opening ceremony on July 23.
- Officials said in March that foreign spectators wouldn’t be permitted to travel to Japan to attend the Olympics.
- Guidelines released by the International Olympic Committee and Tokyo organizers said venues could be filled up to 50% capacity, with a maximum of 10,000 spectators at each event.
- Plans could change if infections in Japan rise sharply, they said.
Hong Kong’s Apple Daily Considers Closing Unless Government Releases Funds – Wall Street Journal, 6/21/2021
- The publisher of the popular pro-democracy Apple Daily newspaper said it may cease publishing after authorities froze its assets and charged senior executives including its top editor under the national-security law.
- Its closure would herald the biggest blow to press freedom in the city since Beijing imposed a national-security law in June 2020 to crush dissent in the Chinese territory. Apple Daily and its jailed founder, Jimmy Lai, have been frequent targets for the city’s authorities.
- Board members of Next Digital, the newspaper’s publisher, met on Monday and set a Friday deadline to decide whether to close down operations, Apple Daily reported.
- The board voted to request that the government release portions of its assets so that it can pay its employees.
Europe’s Wizz Air expects to fully recover from pandemic next year – Reuters, 6/21/2021
- European budget carrier Wizz Air expects to fully recover from the coronavirus crisis as travel demand rebounds from the pandemic, its chief executive said on Monday.
- Speaking at the virtual Paris Air Forum, Jozsef Varadi repeated recent comments that the Hungary-based airline would fly more seats this summer than it was flying two years ago before the pandemic struck.
- “From my perspective, 2022 should be a fairly robust year in terms of delivering not just the volume of traffic but also the financial performance attached to it,” he said.
- Speaking alongside Varadi, Air France-KLM CEO Ben Smith said he had been pleasantly surprised at the demand among travelers visiting friends and family.
- “We are hoping to run about 60-65% of capacity this summer.”
- Napoleon abdicated his throne for the second time after his defeat at Waterloo. (1815)
- The U.S. Justice Department was created. (1870)
- President Franklin D. Roosevelt signed the G.I. Bill of Rights. (1944)
- Legendary Boston crime boss, James “Whitey” Bulger is found and arrested by federal authorities in Santa Monica, Calif.(2011)