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Daily Market Report | August 12, 2021

US FINANCIAL MARKET

U.S. Stocks Waver After Jobs Data – Wall Street Journal, 8/12/2021

  • U.S. stocks were mixed ahead of a series of earnings reports and after fresh labor-market data provided insight on the pace of the recovery.
  • Vaccine makers rose after reports that the Food and Drug Administration is close to approving Covid-19 booster shots.
  • Stocks have ground higher in recent days, propelled by strong earnings reports and the Senate’s approval of the $1 trillion infrastructure bill.
  • Concerns about inflation are also receding after a Wednesday data release on consumer prices for July showed a decline on a monthly basis, dropping to 0.5% last month from 0.9% in June.
  • In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 1.366% from 1.339% on Wednesday.
  • A data release showed that jobless claims came in at 375,000 last week, a slight decline from the previous week and in line with analysts’ expectations.
  • The U.S. producer price index jumped 6.2% in July, more than economists had forecast.

eBay’s Active Buyers Declined 2% – Wall Street Journal, 8/11/2021

  • eBay reported a decline in active buyers in the latest quarter and projected lower-than-expected revenue in the current quarter, in another sign of softening e-commerce trends.
  • The online marketplace reported 159 million active buyers for the June quarter, a 2% decline from a year earlier.
  • The company also said it expected revenue from continuing operations of $2.42 billion to $2.47 billion in the current quarter, with an organic growth rate of 6% to 8%. Analysts polled by FactSet were expecting $2.49 billion.
  • eBay isn’t providing full-year guidance in part because of the uncertainty that remains as the pandemic continues, Chief Financial Officer Steve Priest said.
  • For the second quarter, eBay reported net revenue of $2.67 billion, compared with $2.34 billion a year earlier.
  • eBay reported earnings of $10.73 billion, compared with $746 million a year earlier.
  • Adjusted earnings from continuing operations were 99 cents a share.

Palantir Raises Sales Forecast on Strong Government Uptake – Bloomberg, 8/12/2021

  • Palantir forecast sales of its data software will grow 33% in the third quarter, reflecting heightened demand from government agencies and that more companies are beginning to sign up.
  • Revenue will be about $385 million in the period ending in September, the Denver-based company said in a statement Thursday.
  • That exceeds the company’s previous outlook as well as an average of analysts’ estimates compiled by Bloomberg.
  • It forged partnerships this year with International Business Machines and Fujitsu to resell its technology and with Amazon Web Services to support it.
  • Palantir also began selling its software through a monthly subscription to a handful of startups connected to former employees.
  • Sales results in the quarter were encouraging. Palantir reported $376 million in revenue for the period that ended in June, up 49% from a year earlier.
  • Government sales remained healthy in the second quarter at a growth rate of 66%, the company said. It was 83% in the first quarter.

Southwest Airlines Says Delta Variant Is Hurting Its Business – Wall Street Journal, 8/11/2021

  • Southwest Airlines said the recent surge in Covid-19 cases is causing bookings to slow and cancellations to rise, showing how quickly the Delta variant is denting economic activity.
  • The airline said in a regulatory filing Wednesday that the recent slowdown meant it now expects operating revenue for the month to be 15% to 20% below 2019 levels.
  • That compares with an earlier estimate for a decline of 12% to 17%.
  • Southwest said September revenues could be down by as much as a quarter from 2019.
  • Southwest executives last week said they expected business traffic in September to be down 50% from pre-pandemic levels, compared with a 69% drop in June.

Global ETF Assets Hit $9 Trillion – Wall Street Journal, 8/12/2021

  • Investors poured $705 billion into exchange-traded funds through the first seven months of the year, pushing 2021’s world-wide tally to a record $9.1 trillion, according to data from Morningstar.
  • Net flows so far this year have nearly eclipsed the $736.5 billion investors had moved into ETFs globally in all of 2020.
  • U.S. ETFs accounted for a record $519 billion of the total, sending assets in U.S. funds to about $6.6 trillion.
  • ETFs now hold more money than index-tracking mutual funds, which had about $8.8 trillion in assets as of June, though mutual funds overall still command more money, with about $40.7 trillion in assets.
  • Active ETFs still represent a small but growing segment of the overall ETF market.
  • Nonindexed ETFs, including those that actively pick stocks, carried $358 billion in assets as of July, about 4% of the overall ETF market, according to Morningstar’s data. That was up from $193 billion a year ago.

Facebook May Have to Sell GIF-maker Giphy on UK Competition Concerns – Reuters, 8/12/2021

  • Britain might require Facebook to sell GIF website Giphy after the country’s competition regulator said on Thursday its investigation found the deal between the two companies would hurt the display advertising market.
  • Facebook, the world’s largest social media company, bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram.
  • The deal was pegged at $400 million by Axios.
  • The UK’s Competition and Markets Authority found that, before the Facebook deal, Giphy was considering expanding its paid advertising services offered in the United States to other countries, including the UK.
  • However, Facebook terminated Giphy’s ad partnerships following the deal, according to the regulator.

Coffee Jolt Gets Pricier as Costs of Beans, Labor, Transport Rise – Wall Street Journal, 8/12/2021

  • Retail brands like Folgers, as well as independent coffee chains, are raising prices or plan to soon, executives said
  • Starbucks and Nestlé have said they could increase prices, while other coffee sellers try to hold prices steady, aiming to capture more business.
  • Coffee roasters and cafe operators are responding to poor harvests in major coffee-growing regions and logistics snarls that executives said have constrained bean supplies, delayed shipments and boosted costs.
  • The supply chain issues are likely to worsen as a cold snap in Brazil, the world’s biggest coffee producer, is expected to reduce next year’s crop.
  • The price of coffee futures traded on Intercontinental Exchange markets this year has averaged about $1.43 per pound, the highest it has been since 2014, according to Macrotrends LLC.
  • Retail sales of coffee jumped from roughly $10 billion in 2019 to around $11 billion in 2020, according to market research firm IRI, and totaled almost $11 billion for the 52-week period ended July 11, the firm estimated.

US ECONOMY & POLITICS

U.S. Jobless Claims Fell Last Week – Wall Street Journal, 8/12/2021

  • First-time applications for benefits, a proxy for layoffs, fell to a seasonally adjusted 375,000 in the week ended Aug. 7, from a revised 387,000 in the prior week, the Labor Department said Thursday.
  • The four-week moving average, which smooths often volatile data, edged up to 396,250 last week.
  • That is well below the roughly 6 million new claims filed in late March and early April 2020, but above the about 220,000 applications filed weekly in the months before the pandemic.
  • Thursday’s report showed the number of continuing claims, a proxy for the total number of people receiving benefits through state programs, fell to 2.9 million, the lowest since the middle of March 2020, at the start of the pandemic.
  • Employers added a seasonally adjusted 943,000 jobs in July, the largest increase in almost a year, according to a separate Labor Department report released last week.
  • Job openings rose to 10.1 million in June, the highest level since records began in 2000, according to the department. That is more than the 9.5 million people who were unemployed that month.

U.S. July Budget Deficit hits $302 billion as spending remains high-19 – Reuters, 8/11/2021

  • The U.S. government on Wednesday posted a July budget deficit of $302 billion, a record for that month, as COVID-19 relief spending stayed elevated while receipts returned to a more normal pace after a delayed July tax deadline last year.
  • Receipts for the month totaled $262 billion, down 54% percent from July 2020, while outlays were $564 billion, down 10% from the year-earlier period.
  • The U.S. deficit for the first 10 months of fiscal 2021 came to $2.540 trillion, down 10% from the year-earlier record of $2.807 trillion.
  • A U.S. Treasury official said that the smaller year-to-date outlays and deficits reflected some tapering of COVID-19 relief spending, with Labor Department outlays for supplemental unemployment benefits down 8% to $359 billion, and Small Business Administration outlays down 40% to $338 billion.

2020 Census Results to Guide Redistricting, May Show First Drop in White Population – Wall Street Journal, 8/12/2021

  • The first detailed results of the 2020 census, scheduled for release Thursday, are expected to show a nation that is aging, diversifying and continuing to grow faster in the South and Southwest.
  • The decennial census data might also show that the total white population shrank for the first time in U.S. history, with all of the nation’s growth attributed to nonwhite residents.
  • The census also has been expected to document the continued depopulation of rural areas as cities and their suburbs grow and gain political sway.
  • Legislators and commissions will immediately use them to begin redrawing local and federal voting districts in time for next year’s elections.
  • In addition to intrastate shifts, 13 states are set to gain or lose seats in the House of Representatives next year through the once-a-decade reapportionment required by the Constitution.
  • They’ll also lose or gain votes in the Electoral College beginning in the 2024 presidential election.

California Teachers Must Be Vaccinated or Tested Weekly for Covid-19 – Wall Street Journal, 8/11/2021

  • California will require schoolteachers and staff to show proof of vaccination or submit to regular coronavirus testing, Gov. Gavin Newsom said Wednesday.
  • Under California’s public-health order, public and private school personnel will need to prove they are fully inoculated by Oct. 15 or agree to weekly testing for the virus.
  • Exceptions will be made for those who have medical reasons not to receive the shot.
  • Across California, 63.8% of residents over 12 are fully vaccinated against Covid-19, compared to 58.8% of those nationwide, according to state and federal health data.
  • Just over 7,000 people are hospitalized with Covid-19 in California, up from about 1,200 in June.
  • The California Teachers Association, the state’s largest umbrella teachers union that represents about 310,000 educators, said nearly 90% of its membership is already vaccinated based on internal survey data.

App Store Competition Targeted by Bipartisan Senate Bill – Wall Street Journal, 8/11/2021

  • The bipartisan bill by Sens. Richard Blumenthal (D., Conn.) and Marsha Blackburn (R., Tenn.) aims to boost competition and consumer protections by placing new restrictions on how the stores operate and what rules they can impose on app developers.
  • Called the Open App Markets Act, the measure is the latest reflection of lawmakers’ concerns about the power of major technology companies across a range of markets including search, advertising and social media.
  • It aims to address longstanding concerns among developers such as Epic Games about in-app payments and other matters.
  • It would obligate the companies to protect app developers’ rights to tell consumers about lower prices and offer competitive pricing.  It would effectively allow apps to be loaded onto Apple users’ devices outside of the company’s official app store.

EUROPE & WORLD

Baidu Outlook Disappoints After Covid Surge, China Crackdown – Bloomberg, 8/12/2021

  • Baidu delivered a conservative outlook for the current quarter as a resurgent pandemic outbreak in China overshadowed the internet search giant’s push into newer arenas like cloud and smart devices
  • Revenue for the three months ended June climbed 20% from a year earlier to 31.35 billion yuan ($4.8 billion), compared with the 30.9 billion yuan of estimates.
  • The company predicted sales of 30.6 billion yuan to 33.5 billion yuan for the September quarter, versus the 33.1 billion yuan seen by analysts.
  • Baidu swung to a net loss of 583 million yuan in the second quarter, after marking down the value of its stake in Kuaishou Technology.
  • Near term, Baidu is still counting on search and other content offerings like live-streams and web shows to fuel its advertising platform, which contributed roughly 64% of sales for the first quarter.

China Signals More Regulation for Businesses in Coming Years – Bloomberg, 8/12/2021

  • China released a five-year blueprint calling for greater regulation of vast parts of the economy, providing a sweeping framework for the broader crackdown on key industries that has left investors reeling.
  • Law enforcement will be strengthened in sectors ranging from food and drugs to big data and artificial intelligence, the document said.
  • Over the past year Chinese authorities have launched anti-monopoly probes into some of the nation’s largest tech companies such as Alibaba, while also mandating cybersecurity reviews for foreign listings, a measure that has created problems for Didi.

Israel, 80% Vaccinated, Suffers Another Covid-19 Surge – Wall Street Journal, 8/12/2021

  • Health officials are warning that Israel could face a fourth lockdown during the Jewish holiday season in September if the country doesn’t improve on its 80% adult vaccination rate and deliver more booster shots.
  • There has been a jump in Israel in cases of severe illness caused by the virus since the start of August, doubling to 400 in a population of 9 million, with 240 of those patients already having been vaccinated.
  • Patients over 50 years old account for 90% of the severe cases, Prime Minister Naftali Bennett said Tuesday.
  • Israeli authorities say more than 600,000 Israelis ages 60 and above, well over a third of the age group, have received a Pfizer booster since its use was approved.
  • To be eligible, five months must have passed since the recipient got a second shot.

China, Russia Hold Military Drills Amid Security Concerns in Afghanistan, Central Asia – Wall Street Journal, 8/12/2021

  • About 10,000 troops from China and Russia are carrying out joint military exercises in northwestern China to test some of the People’s Liberation Army’s newest weapons and signal unity on common security concerns such as Afghanistan.
  • China and Russia hold air, land and sea exercises routinely, projecting power when it comes to areas of common interest like North Korea and the disputed East China Sea.
  • The exercises this week come as the Taliban in Afghanistan carry out a military offensive that is setting off security alarm bells in neighboring countries.
  • More than 80% of the Chinese weapons and equipment used for the drills were newly developed, including the PLA’s J-20 stealth fighter, KJ-500 early-warning and control aircraft, its J-16 jet fighter and unmanned combat vehicles, according to state broadcaster China Central Television.
  • China’s Defense Ministry said the exercises, which wrap up on Friday, represented a new level of cooperation between the two countries for a “new era.”

Factmonster – TODAY in HISTORY

  • Issac Singer patented the sewing machine. (1851)
  • A peace protocol ending the Spanish-American War was signed. (1898)
  • The last American combat troops left Vietnam. (1972)
  • In the world’s worst single-aircraft disaster, a Japan Air Lines 747 crashed into Mt. Osutaka, killing 520 of the 524 aboard. (1985)
  • Swiss banks agreed to pay $1.25 billion to settle lawsuits brought by Holocaust survivors and their heirs. The banks had kept millions of dollars deposited by Holocaust victims before and during World War II. (1998)

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