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Daily Market Report | August 11, 2021

US FINANCIAL MARKET

Stocks Open Higher After Inflation Data – Wall Street Journal, 8/11/2021

  • U.S. stocks edged higher and Treasury yields ticked lower Wednesday after the release of inflation data for July.
  • The U.S. consumer-price index rose 5.4% in July from a year earlier.
  • The Federal Reserve is betting that elevated inflation readings will be temporary, a key tenet of its easy-money policies.
  • In bond markets, the yield on the 10-year Treasury note ticked up to 1.35% from 1.342% Tuesday.
  • Brent crude, the international oil benchmark, fell 0.8% to $70.04 a barrel after CNBC reported that the White House would call on OPEC and its oil-producing allies to boost production.
  • Overseas, the pan-continental Stoxx Europe 600 edged up 0.2%.
  • China’s Shanghai Composite ticked 0.1% higher and Japan’s Nikkei 225 added almost 0.7%. South Korea’s Kospi fell 0.7%.

Wendy’s boosts sales forecast, bets on revamped breakfast menu – Reuters, 8/11/2021

  • Wendy’s beat estimates for quarterly results and raised its forecast for annual sales on Wednesday, betting on its revamped breakfast menu to attract more customers after the easing of pandemic-related dining restrictions.
  • Shares in the company, which increased its quarterly cash dividend by 20% to 12 cents per share, rose more than 3% in premarket trade.
  • Wendy’s benefited from the breakfast menu it launched last year as well, which includes the crowd-favorite Baconator burger.
  • The hamburger chain will boost its annual advertising spend by $10 million as it looks to draw more customers to its breakfast offering.
  • Dublin, Ohio-based Wendy’s also said restaurant services provider Reef Kitchens would open and run 700 delivery kitchens, over the next five years.
  • This will offer Wendy’s products across the United States, Canada and the United Kingdom following a pilot in Canada.

White House Urges OPEC to Boost Oil Output Amid Covid-19 Economic Recovery – Wall Street Journal, 8/11/2021

  • The White House urged OPEC to boost oil production Wednesday, saying recent planned increases are insufficient as countries around the world seek to emerge from the Covid-19 pandemic.
  • Brent crude, the international oil benchmark, fell 0.8% to $70.04 a barrel after the White House announcement.
  • In July, OPEC and a group of Russian-led oil producers agreed to unleash millions of barrels of crude over the next two years, committing to restore all the cuts they made at the start of the Covid-19 pandemic.
  • The group chose to move gradually, with monthly installments of new oil through the latter end of 2022.

NortonLifeLock Agrees to Buy Cybersecurity Provider Avast – Wall Street Journal, 8/10/2021

  • NortonLifeLock agreed to acquire and combine with cybersecurity firm Avast in a cash-and-stock deal that would extend the U.S. company’s focus on consumer software.
  • Shareholders of Prague-based Avast will receive a combination of cash and newly issued shares of NortonLifeLock in a deal that has an equity value between $8.1 billion and $8.6 billion, the companies said.
  • NortonLifeLock, based in Tempe, Ariz., was previously known as Symantec Corp. before it closed a $10.7 billion deal to sell its enterprise-security business to Broadcom in 2019.
  • Avast shareholders have two options as part of the deal. One entail receiving $2.37 in cash and 0.19 shares in NortonLifeLock for every share of Avast they own.
  • The other choice includes $7.61 in cash and 0.03 shares of NortonLifeLock.
  • The stock exchange ratio is based on NortonLifeLock’s closing price of $27.20 on July 13, the day before news of deal talks was reported.

Fannie Mae Aims to Make Home Loans More Accessible – Wall Street Journal, 8/11/2021

  • Mortgage finance giant Fannie Mae is making it easier to include rent-payment history as part of the mortgage approval process, a move intended to help borrowers with limited credit histories get better access to home loans.
  • The changes to Fannie Mae’s underwriting system, which are scheduled to go into effect Sept. 18, will allow it to automatically identify rent payments from applicants’ bank-account information.
  • Fannie Mae said the move to include rent payments isn’t about lowering the bar for credit approvals.
  • Rather, consumers might not appear as financially responsible during the loan decision-making process as they would if rent payments were factored in.

Messi’s Twitch Interview Shows How Social Media Is Conquering Sport – Bloomberg, 8/11/2021

  • An app used mostly for watching video games just clinched the sports interview of the year in another blow to the traditional world of broadcasting.
  • Spanish influencer Ibai Llanos chatted with Lionel Messi on Amazon’s streaming platform Twitch after the world’s best-paid athlete signed with French soccer club Paris Saint Germain from Barcelona.
  • More than 317,000 people watched the exclusive interview, the kind of prestigious content that would often be sold to the highest bidder for TV broadcast in different territories.
  • Sports viewing is shifting steadily onto streaming platforms, and even overtaking traditional broadcast TV in the Asia Pacific region, according to GlobalWebIndex.
  • ​Soccer clubs are eager to tap this new revenue source after they were hit hard by the coronavirus pandemic, especially as they need to win over younger audiences who enjoy video gaming just as much as traditional sports.

Samsung Makes $999 Foldable Phone in Challenge to Coming iPhones – Bloomberg, 8/11/2021

  • Samsung launched its lineup of consumer devices for the latter half of the year Wednesday, positioning its new Galaxy Z Flip 3 as a direct rival to Apple’s upcoming iPhone release.
  • The 5G-capable, Android-powered device dramatically lowers the entry price for the foldables category, coming in at $999 after its predecessor had cost $1,449 at launch.
  • ​Samsung committed to “a full-scale flagship marketing” blitz for its foldables this year during its most recent earnings call.
  • Samsung is hoping to steal a march on the competition by popularizing a device category that’s been plagued by technical problems and consumer ambivalence given the high price tags.
  • The clamshell-like Galaxy Flip 3 has a 6.7-inch display on its interior and a 1.9-inch screen on its outside cover.
  • The only compromise to accommodate its design is the relatively smaller 3,300mAh battery.
  • The book-like Galaxy Fold 3 expands the inner display to 7.6 inches, has a full-size 6.2-inch panel on the exterior and fits a larger battery.

US ECONOMY & POLITICS

Inflation Stayed High in July as Economy Rebounded – Wall Street Journal, 8/11/2021

  • Inflation remained elevated in July, as the economy continued to rebound amid pandemic-related shortages of labor and supplies.
  • The Labor Department reported Wednesday that its consumer-price index rose 5.4% in July from a year earlier, the same pace as in June and the highest 12-month rate since 2008.
  • The CPI climbed a seasonally adjusted 0.5% in July from June, a slightly cooler pace than its 0.9% increase in June from May.
  • U.S. gross domestic product rose at a rapid 6.5% seasonally adjusted annual rate in the second quarter.
  • It was powered by consumer spending that climbed at an 11.8% pace as more people received vaccinations, businesses reopened and trillions of dollars in federal aid flowed through the economy.
  • Consumers’ median inflation expectation for three years from now rose slightly to 3.7% in July, from 3.6% a month earlier, and was the highest reading since August 2013, according to a survey by the New York Fed.

Covid-19 Rent-Relief Program Marred by Delays, Confusion, Burdensome Paperwork – Wall Street Journal, 8/11/2021

  • Since last December, Congress has appropriated a total of $46.6 billion to help tenants who were behind on their rent.
  • As of June 30, just $3 billion had been distributed, though a senior official said the Biden administration hoped at least another $2 billion had been distributed in July.
  • While the program is overseen by the Treasury, it relies on a patchwork of more than 450 state, county and municipal governments and charitable organizations to distribute aid.
  • Often, tenants and landlords didn’t know money was available, and many of those who did apply had to contend with cumbersome applications and requests for documentation.
  • For now, tenants are protected by a national eviction moratorium, which has been extended five times and is now set to expire on Oct. 3.

Senate Passes Democrats’ $3.5 Trillion Budget Blueprint – Wall Street Journal, 8/11/2021

  • The Senate passed a $3.5 trillion budget blueprint early Wednesday, the first step in an arduous process designed to allow Democrats to push through a sweeping package of education, healthcare, climate and other provisions without GOP support.
  • The party line vote, 50-49, came just before 4 a.m., one day after the Senate passed a roughly $1 trillion bipartisan infrastructure package.
  • For much of the day Tuesday and into Wednesday morning, the Senate slogged through a raft of largely symbolic amendment votes known as vote-a-rama that precede the final vote on the budget resolution.
  • Republicans have criticized the budget framework as an unprecedented deluge of spending that could fuel inflation and increase taxes for individuals and corporations.
  • If the House passes a budget resolution identical to the Senate’s, Democrats can unlock a special process known as reconciliation that allows them to pass legislation with a simple majority in the Senate rather than the 60 votes most bills need.

Fed’s Evans Open to Reducing Asset Purchases Later This Year – Wall Street Journal, 8/10/2021

  • The economy is on track to later this year satisfy the Federal Reserve’s threshold to begin reducing its $120 billion in monthly asset purchases, a top central bank official said Tuesday.
  • Chicago Fed President Charles Evans said he expected recent employment gains to continue, which would allow the Fed to declare that the economy has achieved the “substantial further progress” it laid out last December.
  • Mr. Evans said he expects the unemployment rate to fall to 4.5% by year’s end and the Fed’s preferred inflation gauge, excluding volatile food and energy categories, to end the year around or slightly above 3%.
  • He expects that core inflation gauge to decline to around 2.1% by the end of next year.

Senate Passes $550 Billion Infrastructure Plan in Biden Win – Bloomberg, 8/10/2021

  • The Senate passed a $550 billion infrastructure plan that would represent the biggest burst of spending on U.S. public works in decades, sending the legislation to the House where its fate is in the hands of the fractious Democratic caucus.
  • The bipartisan 69-30 vote Tuesday marked a significant victory for President Joe Biden’s economic agenda.
  • Nineteen Republicans, including Minority Leader Mitch McConnell, joined with all 50 senators who caucus with Democrats to support the bill.
  • The bill still faces hurdles in the House, which is scheduled to be on break until Sept. 20.
  • House Speaker Nancy Pelosi, under pressure from progressives who want their priorities addressed, has said she will not allow a vote on the bipartisan package until the Senate has passed the broader economic plan.

Lt. Gov. Kathy Hochul Begins Transition Following Gov. Cuomo’s Resignation– Wall Street Journal, 8/11/2021

  • New York Lt. Gov. Kathy Hochul is lining up support among local politicians as she transitions to become New York’s first female governor after Gov. Andrew Cuomo said Tuesday he would resign.
  • She has served as lieutenant governor since 2015 and previously was a member of Congress representing western New York.
  • Ms. Hochul takes over the state during a period of political tumult and economic uncertainty.
  • The Covid-19 pandemic created a rent crisis in New York, leaving tens of thousands of tenants in arrears, but the state has been slow to distribute federal aid.

EUROPE & WORLD

Fresh U.K. Covid-19 Data Boosts Hopes That Delta Variant Can Be Held in Check – Wall Street Journal, 8/11/2021

  • The latest surge of Covid-19 cases in the U.K. is giving rise to growing optimism among doctors and scientists that the highly transmissible Delta variant of the coronavirus can be held at bay with high levels of vaccination and public caution.
  • Between 90% and 94% of British adults have some degree of immunity to coronavirus from full or partial vaccination, or prior infection, the U.K. statistics office estimates, based on statistical analysis of blood samples.
  • The seven-day average of new Covid-19 cases in the U.K. stood at 28,007 Tuesday, down 41% from a peak of almost 48,000 nearly three weeks ago.
  • In early August, visits to restaurants, shopping malls and recreational settings such as cinemas were around 7% below pre-pandemic levels. Public-transport use is a third lower. Visits to workplaces are 40% lower.
  • Nathan Spence, a doctor working in an acute admissions unit in a hospital in Oxford, England, said he is currently treating around 30 Covid-19 patients, compared with 250 to 300 in January.

China Sentences Canadian Citizen to 11 Years for Espionage in Case at Heart of Diplomatic Standoff – Wall Street Journal, 8/11/2021

  • A Chinese court sentenced entrepreneur Michael Spavor to 11 years in prison on espionage charges in the first of two national-security cases involving Canadian citizens that sit at the center of a fierce standoff with both Canada and the U.S.
  • Mr. Spavor was found guilty of “probing into and illegally providing state secrets” to foreign actors, said the Dandong Intermediate People’s Court in northeastern Liaoning province on its website Wednesday.
  • Originally from Calgary, Alberta, Mr. Spavor ran a Dandong, China-based nonprofit called Paektu Cultural Exchange.
  • The organization put together academic, tourist and business trips to North Korea, including one by former Chicago Bulls basketball star Dennis Rodman, who had developed a fascination with the nation and its young leader, Kim Jong Un.

Russia announces new criminal charge against Navalny – Reuters, 8/11/2021

  • Jailed Kremlin critic Alexei Navalny faces a new criminal charge of establishing an organization that incited Russians to break the law, the Investigative Committee, which probes major crimes, said on Wednesday.
  • Navalny, President Vladimir Putin’s fiercest domestic critic, is already serving a 2-1/2-year sentence for parole violations he calls trumped up.
  • The Investigative Committee said in a statement that Navalny and his allies used his Anti-Corruption Foundation to call on Russians to take part in unauthorized protests in January that authorities said were illegal.

Factmonster – TODAY in HISTORY

  • The first inmates arrived at the federal prison on Alcatraz Island in San Francisco Bay. (1934)
  • More than seven years of fighting in Indochina formerly ended with the cessation of French control. (1954)
  • Chad gained its independence from France. (1960)
  • Charles Taylor, president of Liberia, formally relinquished his office to Moses Blah and left for Nigeria. (2003)

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