US FINANCIAL MARKET
Stocks Rise After S&P 500, Dow Hit Records – Wall Street Journal, 8/13/2021
- U.S. stocks climbed Friday, putting major indexes on course to end a muted week close to record highs, as investors drew confidence from a blockbuster round of earnings.
- The broad gauge of large-cap stocks climbed Thursday to its 47th all-time closing high of 2021 and has risen for five of the past six trading days.
- Walt Disney shares jumped 4.4% ahead of the bell in New York after posting $918 million in profit for its fiscal third quarter compared with a loss of $4.72 billion in the same period last year.
- Moderna rose 2.9% and Pfizer edged up 0.6% after the Food and Drug Administration authorized booster shots for certain people with weakened immune systems.
- Companies including Disney and Tyson Foods posted a big jump in profits this week, and 86% of S&P 500 constituents that have filed quarterly reports have beaten analysts’ expectations.
- Among other stocks, Airbnb fell 2.8% in premarket trading after saying it didn’t know whether people would be as willing to travel this fall as over the summer.
- DoorDash lost 4% after the food-delivery company posted a $102 million loss for the second quarter.
- In the bond market, the yield on 10-year Treasury notes ticked down to 1.352% Friday, from 1.366% Thursday.
- In overseas markets, the Stoxx Europe 600 rose 0.2%, putting the regional benchmark on track for a 10th consecutive closing record.
- China’s Shanghai Composite Index fell 0.2% by the close and Japan’s Nikkei 225 ticked down 0.1%.
Disney Posts a Rebound as Tourists Returned to Its Theme Parks – Wall Street Journal, 8/12/2021
- The company posted fiscal third-quarter sales of $17 billion, up 45% from the year-ago quarter, when the pandemic locked down much of the world, but results were still below the $20.2 billion in the 2019 third quarter.
- Analysts polled by FactSet expected sales of $16.76 billion.
- Overall, Disney beat analysts’ estimates for its fiscal third quarter and recorded $918 million in profit, or 50 cents a share, for the three-month period ended July 3, compared with a year-ago loss of $4.72 billion, or $2.61 a share.
- Adjusted earnings were 80 cents a share.
- Tourists returning to theme parks bolstered Disney’s balance sheet, as key resorts stayed open throughout the quarter.
- Revenue at the division—which includes its storied Walt Disney World and Disneyland resorts—increased 300% from the year-ago period, and it swung to a profit of $356 million for the quarter.
- Disney+ subscriber numbers beat estimates, reaching 116 million, up from 103.6 million in the second quarter, but its Hulu services had even higher growth rates.
- Total Hulu subscriptions rose 21% from a year ago, to 42.8 million.
- Hulu’s paid service generates more than three times the average monthly revenue per subscriber when compared to Disney+, the company said in its report.
DoorDash Falls Amid Steep Costs to Sustain Pandemic Growth – Bloomberg, 8/12/2021
- DoorDash posted record orders, but fell as investors focused on signs the food-delivery company will need to spend heavily to expand into new markets and sustain its pandemic-induced hyper growth.
- Sales increased 83% to $1.24 billion in the three months ended June 30, the San Francisco-based company said Thursday in a statement.
- Analysts, on average, projected $1.09 billion, according to data compiled by Bloomberg.
- DoorDash reported a loss of $102 million from a profit of $23 million in the second quarter a year earlier.
- Analysts, on average, projected a loss of $66.7 million.
- Expenses more than doubled to $1.34 billion as the company increased investments to build out non-meal categories, expand internationally and boost driver recruitment.
- The shift from indoor dining catapulted DoorDash ahead of rivals like Uber and Grubhub and the company now commands 56% of U.S. food-delivery sales, according to Bloomberg Second Measure.
- Customers placed 345 million orders in the quarter, a 69% increase, with the gross value of those orders at $10.5 billion.
- The company projected gross order value of $9.3 billion to $9.8 billion in the period ending in September.
Airbnb Revenue Nearly Quadrupled in Second Quarter – Wall Street Journal, 8/12/2021
- Airbnb’s second-quarter revenue nearly quadrupled, rebounding from the lows of the pandemic and exceeding pre-pandemic levels, as domestic travel lifted the home-sharing company’s fortunes.
- Its previous revenue record was $1.65 billion in that quarter in 2019.
- Analysts were projecting third-quarter revenue of $1.96 billion before the company’s latest guidance.
- Revenue for the three months ended June climbed to $1.3 billion compared with $335 million in the same period last year, when world-wide Covid-19 lockdowns decimated Airbnb’s business.
- That beat the average estimate of analysts polled by FactSet and came in 10% higher than the same quarter in 2019, before the pandemic.
- Airbnb’s net loss narrowed to $68 million in the second quarter, compared with a loss of $576 million in the year-earlier period. Analysts had expected a loss of $254 million.
- Airbnb second-quarter sales and marketing expenses rose 76% from the same period a year ago, when the company slashed its marketing budget as part of a wide-ranging overhaul.
- Airbnb posted adjusted earnings before those items of $217 million in the second quarter.
- That compared with a loss of $397 million by that measure in the year-earlier period.
- The company is projecting its highest adjusted profit before those items in the third quarter, alongside record revenue.
Boeing’s Starliner Launch Could Face Delay of Several Months – Wall Street Journal, 8/12/2021
- The company has spent years developing the Starliner and was supposed to launch it late last month to dock with the International Space Station, without crew on board—after a failed attempt a year and a half ago.
- Boeing engineers have been working to repair a problem with some of the valves in a propulsion system on the Starliner that was discovered earlier this month while the vehicle sat on a launchpad.
- The company also said it would work with NASA and United Launch Alliance, a joint venture between it and Lockheed Martin that provides the rocket to take the Starliner to space, to determine a date for another launch “when the spacecraft is ready.”
US ECONOMY & POLITICS
U.S. Inflation Forecasts Keep Rising as Supply Constraints Loom – Bloomberg, 8/13/2021
- Forecasters lowered economic growth projections for this year and lifted inflation expectations into 2022 across a variety of metrics, according to Bloomberg’s latest monthly survey of economists.
- Compared to a year earlier, the personal consumption expenditures price index is now expected to rise 4% in the third quarter and 4.1% in the fourth, double the Federal Reserve’s 2% goal.
- Expectations for the core measure, which strips out the volatile food and energy components, were also revised higher.
- Consumer outlays are now forecast to grow at an annualized 4.5% pace in the current period, down nearly two percentage points from last month’s survey and a sharp deceleration from the sizzling 11.8% rate seen in the second quarter.
- A softening pace of household demand paired with ongoing supply constraints weighed on expectations for economic growth.
- Gross domestic product is now seen rising 6.3% in the fourth quarter versus the same three months last year.
- That’s a downgrade from the 7.1% projection in the July survey.
FDA Authorizes Covid-19 Boosters for Certain Immunocompromised – Wall Street Journal, 8/13/2021
- The agency on Thursday cleared giving a third dose of a messenger RNA Covid-19 vaccine from Pfizer and its partner BioNTech or from Moderna to immunocompromised people.
- Immunocompromised people who didn’t have an antibody response after two doses of the mRNA vaccines had responses after a third dose, studies indicated, supporting the decision to recommend a third dose.
- About 2.7% of American adults are immunocompromised, which also includes people who live with HIV or take cancer treatments and other drugs that suppress their immune systems.
- Pfizer, which developed a Covid-19 vaccine with BioNTech, has said it plans to ask U.S. regulators to authorize booster shots of its two-dose vaccine this month. Moderna has said it plans to do so next month.
- Johnson & Johnson is expected to release data about the efficacy of two doses of its single-shot vaccine later this month.
Pelosi Faces Revolt From Moderates on Budget Vote Timing – Bloomberg, 8/13/2021
- Nine moderate House Democrats are threatening to withhold support from a $3.5 trillion budget blueprint until a bipartisan infrastructure package is signed into law, threatening to unravel plans for moving President Joe Biden’s agenda through Congress.
- The moderates’ stance risks undermining Pelosi’s strategy, which would bring the budget resolution to a vote in the House the week of Aug. 23.
- Pelosi’s slim margin of control means she can only afford to lose three members of her caucus in a vote on the budget measure, which passed the Senate on a party-line vote this week and isn’t expected to garner any Republican support in the House.
- Representatives Josh Gottheimer of New Jersey, Carolyn Bourdeaux of Georgia, Filemon Vela of Texas, Jared Golden of Maine, Henry Cuellar of Texas, Vicente Gonzalez of Texas, Ed Case of Hawaii, Jim Costa of California and Kurt Schrader of Oregon signed the letter, first reported by Punchbowl News.
Job Postings Requiring Covid-19 Vaccination Jump in Past Month – Wall Street Journal, 8/13/2021
- The share of job postings stating that a new hire must be vaccinated have nearly doubled in the past month, according to the job search site Indeed.
- The total number remains low, roughly 1,200 postings requiring a vaccination per million in the first week of August.
- But that is well up from about 600 in early July, and about 50 per million job postings in early February.
- The share of job postings, per million, in the education sector that required a vaccination rose to 2,166 in July from 33 in February, according to Indeed.
- In food service, the rate per million rose to 814 in July from 43 in February. The rate per million for accounting rose to 1,184 from 39, and in software development the rate increased to 438 from four.
- Nearly 30% of adults in the U.S. haven’t received at least one dose of a Covid-19 vaccine, according to the Centers for Disease Control and Prevention.
EUROPE & WORLD
Adidas Agrees to Sell Reebok to Authentic Brands – Wall Street Journal, 8/12/2021
- Adidas said it has agreed to sell Reebok to Authentic Brands Group for up to about $2.5 billion, roughly 15 years after acquiring the U.S. fitness brand and trying to revamp it.
- The German sporting-goods company managed to improve the Reebok business, but its sales lagged behind those of Adidas itself and dragged down the group’s profits.
- The company put the value of the deal with Authentic Brands at as high as €2.1 billion.
- Adidas on Thursday said the majority of the transaction will be paid in cash at the deal’s closing, with the remainder made up of deferred and contingent fees.
- The sale doesn’t affect Adidas’s existing guidance for the full year, it said.
- Adidas earlier this month said it sees sales growing by up to 20% for the full year, while at the same time it continues to absorb the effects of Covid-19.
Tesla Battery Supplier CATL Plans $9 Billion Share Sale to Boost Capacity – Wall Street Journal, 8/13/2021
- Contemporary Amperex Technology one of the world’s largest makers of lithium-ion batteries, said Friday it expects to raise up to 58.2 billion yuan, equivalent to $9 billion, via a share placement to large investors.
- The nearly decade-old company, also known as CATL, is a major supplier of batteries to Tesla’s Shanghai factory.
- Its market capitalization was about $180 billion as of Friday, according to FactSet, making it one of the most valuable companies listed in mainland China.
- CATL said it plans to use most of the proceeds to increase the production of lithium-ion batteries at its facilities in China’s Fujian, Guangdong and Jiangsu provinces.
- Besides Tesla, CATL supplies batteries to Chinese EV makers NIO, XPeng, and Li Auto, as well as traditional brands such as Daimler AG’s Mercedes-Benz.
- The company’s revenue in the first quarter of this year doubled to nearly $3 billion, while profit for the three months to March 2021 jumped to $301 million.
- Beijing, meanwhile, has said it wants electric vehicles to make up 20% of China’s new car sales by 2025, and 50% by 2035.
Taliban Seize Kandahar, Prepare to March on Afghan Capital Kabul – Wall Street Journal, 8/13/2021
- The Taliban completed the seizure of Kandahar, Afghanistan’s second-largest city and the Islamist movement’s birthplace, and took into custody a warlord who organized the failed defenses of the western city of Herat.
- The U.S. has already launched the drawdown of its large embassy in Kabul, sending troops to evacuate most of the staff as it cuts the diplomatic presence to an essential core.
- The Taliban’s new governor for Kandahar, Haji Yousaf Wafa, issued a message announcing a general amnesty for government employees and members of security forces, and urged everyone to return to work as normal, including in schools and universities.
- On Friday, the Taliban also entered Pul-e-Alam, the capital of Mr. Ghani’s home province of Logar just south of Kabul, and captured its governor and several other senior officials.
- The Taliban launched their offensive soon after President Biden said in April that all U.S. forces would leave Afghanistan by Sept. 11, implementing the agreements that the Trump administration struck with the Taliban in Doha in February 2020.
Iran Hit by Worst Covid-19 Wave Yet as Vaccine Rollout Flounders – Wall Street Journal, 8/13/2021
- Iran was the first coronavirus hot spot in the Middle East, and remains the hardest-hit country in the region, largely due to a botched response from authorities, experts and analysts say.
- The government has been reluctant to impose fresh lockdowns to contain the latest wave as the country’s economy reels from damaging U.S. sanctions.
- President Ebrahim Raisi, who draws his support from a conservative base, has refused to ban religious gatherings, despite recommendations from health authorities.
- Only about 4.4% of Iran’s roughly 80 million people have been fully inoculated, mostly with a Chinese vaccine, according to Iranian authorities. About 18% have received one dose, according to Iran’s health ministry.
- The number of new cases in Iran has now reached about 40,000 every day this week, with more than 500 dead on Thursday, both higher than the previous record set during the last major coronavirus wave in late 2020.
- The official death toll is nearing 100,000, though critics say the number is far higher, while the total number of cases has reached 4.3 million, according to the country’s health ministry.
- A series of earthquakes killed 25,000 in Peru and Ecuador. (1868)
- Disney’s Bambi opened at Radio City Music Hall in New York City. (1942)
- The border between East and West Berlin was closed and marked with a barbed wire fence. (1961)
- U.S. swimmer Michael Phelps won his 11th career gold medal, becoming the first athlete in Olympic history to do so. (2008)