US FINANCIAL MARKET
Stocks Rise as Investors Digest Earnings – Wall Street Journal, 10/15/2021
- U.S. stocks rose Friday, heading toward weekly gains following a strong streak of earnings reports.
- A strong batch of earnings from healthcare companies and banks including Morgan Stanley and Citigroup has buoyed the market in recent days.
- Of the 35 companies on the S&P 500 that had reported earnings through Thursday, 80% had beaten analysts’ forecasts, according to FactSet, slightly better than the three-quarters that did so each quarter in 2019, before the pandemic.
- Shares of Goldman Sachs Group jumped 2% after the firm reported earnings of $5.38 billion in the third quarter, up 60% from the comparable period of 2020 and surpassing expectations from analysts.
- Shares of Alcoa climbed 11.5% after the metals producer posted higher third-quarter sales Thursday, boosted by higher aluminum prices.
- Some investors remain concerned that supply-chain blockages and a steep rise in energy prices will fuel inflation, which may prompt central banks to withdraw stimulus measures faster than expected.
- Brent-crude futures, the benchmark in global oil markets, rose 1.2% to $84.98 a barrel, having earlier hit their highest intraday level in three years.
- In the bond market, yields on 10-year Treasury notes rose to 1.571% Friday, from 1.519% Thursday.
- The Stoxx Europe 600 rose 0.5%, led by shares of energy producers and travel-and-leisure companies, which tend to be sensitive to the path of economic growth.
- In Asia, Japan’s Nikkei 225 gained 1.8%, Hong Kong’s Hang Seng rose 1.5% and China’s Shanghai Composite Index edged up 0.4%.
FDA Panel Backs Moderna Booster for Older, High-Risk People – Bloomberg, 10/15/2021
- Booster shots of Moderna’s Covid-19 vaccine should be given to older people and those at high risk of the disease, advisers to U.S. regulators said.
- Additional doses of the two-shot messenger RNA vaccine should be offered to people 65 and older, along with adults 18 and older who are at high risk for medical or occupational reasons, the Food and Drug Administration’s vaccine advisory panel said Thursday in a unanimous, 19-0 vote.
- The booster, which is half the original dose, should be given at least six months after the initial inoculation, the panel said.
- The CDC’s Advisory Committee on Immunization Practices is scheduled to meet on Oct. 20 and 21. The panel will make its own recommendations on boosters, and share that language with CDC Director Rochelle Walensky, who will then decide whether to adopt it or shape her own recommendations.
Goldman Sachs Profit Rises on Deal Bonanza – Wall Street Journal, 10/15/2021
- Goldman Sachs Group reported higher profit and revenue in the third quarter, benefiting from a bevy of deals.
- Revenue was up 26% to $13.61 billion, beating the $11.72 billion expected by analysts.
- The firm’s investment bankers brought in $3.7 billion in fees, the second-best quarter on record and 88% higher than a year ago.
- Goldman earned $1.65 billion in fees from advising on mergers and acquisitions, a quarterly record and more than triple its revenue from a year ago.
- Revenue from underwriting initial public offerings and other stock offerings rose 37% to $1.17 billion.
- The bank reported a 23% increase in trading revenue to $5.61 billion.
- Revenue in the consumer and wealth-management division rose 35% to $2.02 billion, or about 15% of the firm’s third-quarter revenue.
- Goldman boosted lending by 28% from a year ago to $143 billion. Loans in its credit-card unit doubled.
- The Wall Street bank on Friday said profit jumped 60% to $5.38 billion, or $14.93 a share.
- That exceeded the $10.14 a share expected by analysts polled by FactSet.
Schwab Posts Record Earnings With Retail Trading Powering On – Bloomberg, 10/15/2021
- Charles Schwab reported record earnings per share in the third quarter as clients opened new brokerage accounts and traded more amid volatile markets.
- Schwab’s trading revenue of $964 million was more than five times its level a year earlier. That helped boost overall net revenue 87%, to $4.6 billion.
- Customers opened 1.2 million retail brokerage accounts, almost double the number added in the same period a year earlier, the Westlake, Texas-based company said Friday in a statement.
- Average daily trades almost quadrupled to 5.5 million from a year earlier but fell from the previous quarter’s 6 million level.
- Adjusted earnings of 84 cents a share topped the 80-cent average estimate of analysts in a Bloomberg survey.
Alcoa’s Sales Rise 31% on Strong Aluminum Prices – Wall Street Journal, 10/15/2021
- Alcoa reported sharply higher sales for the third quarter, propped up by higher aluminum and alumina prices.
- The aluminum maker said sales increased 31% to $3.11 billion, from $2.37 billion in the year-earlier quarter, topping analysts’ consensus estimate of $2.93 billion.
- Shipments of aluminum slipped 6% from last year and the previous quarter in part because of a lack of railcars and the completion of accumulated inventory sales at one of its smelters.
- Average aluminum prices reached $3,124 for each metric ton for the metal in the quarter, a 13% increase from the second quarter.
- Average alumina prices increased 11% to $312.
- Alcoa said net income attributable to the company was $337 million, swinging from a year-earlier loss of $49 million.
- Per-share earnings amounted to $1.76, compared with a per-share loss of 26 cents a year earlier.
- Alcoa, which also sells the raw materials to make aluminum, continues to see inflationary pressure on raw materials and energy. Costs rose 14% from the year-earlier quarter to $2.32 billion.
Jana Partners Takes Stake in Macy’s, Urges E-Commerce Spinoff – Wall Street Journal, 10/15/2021
- An activist shareholder has taken a stake in Macy’s and is urging the famed retailer to spin off its fast-growing e-commerce business, according to people familiar with the matter.
- Jana Partners LLC sent a letter Wednesday to the company’s board prodding it to separate the online unit, which has about $8 billion in annual revenue, the people said.
- Saks Fifth Avenue, the biggest department-store rival for Macy’s, plans to separate its e-commerce business from its store operations as part of a deal that includes an additional investment.
- Jana is eyeing a similar arrangement, and the Macy’s e-commerce business has already drawn interest from firms that could invest in it in conjunction with a spinoff, some of the people said.
Former Boeing Pilot Indicted in Probe of 737 MAX Crashes – Wall Street Journal, 10/15/2021
- A federal grand jury in Texas indicted a former Boeing pilot, alleging that he deceived air-safety regulators about a flight-control system later blamed for sending two 737 MAX jets into fatal nosedives.
- Mark A. Forkner, 49 years old, was charged with six counts of fraud related to his alleged role in persuading the Federal Aviation Administration to approve pilot-training materials that excluded references to the automated cockpit feature, the U.S. Justice Department said Thursday.
- Prosecutors alleged that Mr. Forkner, in his role as Boeing’s 737 MAX chief technical pilot, withheld crucial information from the FAA about the flight-control system known as MCAS.
- As a result of his alleged deception, a key FAA report, pilot manuals and training materials lacked references to the system, defrauding Boeing’s airline customers, prosecutors said.
- Mr. Forkner is expected to make an initial court appearance Friday in Fort Worth, prosecutors said.
- He faces a maximum penalty of 20 years in prison for each count of wire fraud, and 10 years in prison for each count of fraud involving aircraft parts in interstate commerce.
Aviation supply chain faces mounting strain as demand picks up – Reuters, 10/15/2021
- Global shipping and supply chain disruptions are making it harder for corporate planemakers and suppliers to meet resurgent demand for parts, according to industry executives and analysts.
- With private aviation traffic surpassing 2019 levels this year, some corporate planemakers and suppliers at a flagship business jet show in Las Vegas this week flagged warning signs about supply chain and labor hiccups.
- Planes produced by Cessna business jet producer Textron are flying around 20% more than in 2019, putting pressure on suppliers to keep up with the need to deliver replacement parts.
- The aviation industry on average paid 27% to 44% more for raw materials in the first half of this year compared to last year, according to data from AlixPartners.
U.S. port’s supply chain fix challenge: selling 24/7 shifts – Reuters, 10/15/2021
- The Port of Los Angeles is beginning the hard work of convincing terminal operators, importers, warehouses owners and trucking firms to embrace moving more cargo at night.
- The ports of Los Angeles and Long Beach significantly lag Chinese rivals when it comes to port efficiency, according to a ranking prepared by the World Bank and IHS Markit.
- Port terminals in China usually operate 24/7, many tasks are automated and labor slowdowns are rare, U.S.-based shipping industry consultant Jon Monroe said.
- The White House efforts announced Wednesday are expected to account for just 3,500 additional containers per week being moved at night – a tiny fraction of the 120,000 containers already moving each week.
- Meanwhile, there are 62 container ships waiting to unload some 500,000 containers at Los Angeles/Long Beach – and another 25 are scheduled to arrive in the next three days.
US ECONOMY & POLITICS
Retail Sales Rise, Showing Resilient U.S. Consumers – Wall Street Journal, 10/15/2021
- American consumers stepped up their spending in September, a sign of resilient demand and rising inflation.
- September retail sales rose a seasonally adjusted 0.7% from the previous month, the Commerce Department said Friday, as households shrugged off supply constraints, the Delta variant and the end of enhanced unemployment benefits.
- The rise in sales also partly reflects higher consumer prices, which advanced 0.4% in September from August and 5.4% from a year earlier. The retail sales, which aren’t adjusted for inflation, rose 13.9% in September from a year earlier.
- August retail sales were revised up to 0.9% from 0.7%.
- Spending on autos and auto parts rose 0.5% last month even though auto sales fell in September to a seasonally adjusted annual rate of 12.6 million from 18.8 million in April, according to a separate Commerce Department report.
Food, fuels lift U.S. import prices in September – Reuters, 10/15/2021
- U.S. import prices rebounded in September, lifted by higher food and energy costs, but underlying imported inflation showed signs of moderating.
- Import prices rose 0.4% last month after falling 0.3% in August, the Labor Department said on Friday.
- In the 12 months through September, prices shot up 9.2% after advancing 8.9% in August.
- Economists polled by Reuters had forecast import prices, which exclude tariffs, increasing 0.6%.
- Imported fuel prices increased 3.7% last month after declining 3.0% in August.
- Petroleum prices rebounded 3.9%, while the cost of imported food accelerated 1.3%.
- Excluding fuel and food, import prices dipped 0.1%.
- These so-called core import prices fell 0.1% in August and were up 4.7% on a year-on-year basis in September.
- The report also showed export prices nudged up 0.1% in September after rising 0.4% in August.
- Prices for agricultural exports fell 1.7%. Nonagricultural export prices gained 0.3%.
- Export prices rose 16.3% year-on-year in September after increasing 16.8% in August.
U.S. business inventories rise solidly, but auto stocks fall – Reuters, 10/15/2021
- U.S. business inventory accumulation increased solidly in August, though motor vehicle retailers continued to struggle to restock amid an ongoing global semiconductor shortage, which is forcing automobile manufacturers to cut production.
- Business inventories rose 0.6% after a similar gain in July, the Commerce Department said on Friday.
- Inventories are a key component of gross domestic product. August’s increase was in line with economists’ expectations.
- Inventories increased 7.4% on a year-on-year basis in August.
- Retail inventories gained 0.1% in August as estimated in an advance report published last month.
- That followed a 0.4% rise in July.
- Motor vehicle inventories dropped 1.4% instead of 1.5% as estimated last month.
- Retail inventories excluding autos, which go into the calculation of GDP, rose 0.6% as estimated last month.
- Business sales dipped 0.1% in August after increasing 0.5% in July.
- At August’s sales pace, it would take 1.26 months for businesses to clear shelves, up from 1.25 months in July.
Consumer Sentiment in U.S. Falls to Second-Lowest Since 2011 – Bloomberg, 10/15/2021
- U.S. consumer sentiment fell unexpectedly in early October to the second-lowest level since 2011, as Americans grew more concerned about both current conditions and the economic outlook.
- The University of Michigan’s preliminary sentiment index fell to 71.4 from 72.8 in September, data released Friday showed.
- The figure came in below the median 73.1 in a Bloomberg survey of economists.
- Consumers expect inflation to rise 4.8% over the next year, the highest since 2008, the report showed. Buying conditions were seen as less favorable, especially for vehicles.
- The gauge of current conditions fell to 77.9, the lowest since April 2020.
- A measure of future expectations declined to 67.2, according to the survey conducted Sept. 29 to Oct. 13.
Vulnerable U.S. homeowners face uncertainty as mortgage forbearance ends – Reuters, 10/15/2021
- Close to half a million low-income homeowners in the United States, many of them minorities, are nearing the end of mortgage forbearance plans that allowed them to halt loan payments during the pandemic, presenting a test for the mortgage service firms tasked with helping struggling borrowers move onto payment plans they can afford.
- While close to 80% of homeowners who entered programs at some point in the pandemic have since exited them, the remaining 20% tend to live in areas with higher shares of minorities, or have lower credit scores and lower incomes, research shows.
- Their missed payments could add up to a “forbearance overhang” of more than $15 billion in postponed mortgage payments, or about $14,200 per person, according to Brookings Institution research.
- Some 7.6 million borrowers have been in forbearance at some point during the pandemic, representing about 15% of all mortgage holders, and about 1.25 million borrowers were still in forbearance plans in mid-October, according to Black Knight, a mortgage technology and data provider.
Trading Furor Complicates White House Decisions on Fed Leadership – Wall Street Journal, 10/15/2021
- Federal Reserve Chairman Jerome Powell’s chances for a second term leading the central bank so far have been dented but not derailed by a reputational crisis over stock-trading disclosures by senior officials.
- President Biden’s decision on who should lead the Fed when Mr. Powell’s term ends in February comes as economic data shows signs of broadening inflation pressures, which threaten to complicate coming decisions over unwinding monetary stimulus put in place to support the economy when the Covid-19 pandemic hit last year.
- For now, no Senate Democrats have publicly joined Sen. Elizabeth Warren (D., Mass.) after she ratcheted up her criticism of Mr. Powell’s leadership last week.
- People familiar with the administration’s deliberations said Ms. Warren’s attacks haven’t landed and that the trading imbroglio is viewed as unfortunate but not scandalous.
US reaches record high of more than 96,000 drug overdose deaths in a 12-month period, CDC data show – CNN, 10/15/2021
- Reported drug overdose deaths in the United States hit a new high of more than 96,000 in the 12-month period ending March 2021, according to data released Wednesday by the US Centers for Disease Control and Prevention’s National Center for Health Statistics.
- In those 12 months — a period when Covid-19 pandemic took hold in the United States and shut down normal daily routines — the US saw 96,779 reported drug overdose deaths, an increase of 29.6% from March 2020 to March 2021.
- In the breakdown of CDC overdose death data by drug class, opioids accounted for the highest number of overdose deaths, followed by synthetic opioids excluding methadone. Methadone continued to see the lowest number of overdose deaths.
EUROPE & WORLD
Pandemic Disruptions Blamed for First Increase in Estimated Tuberculosis Deaths in More Than a Decade – Wall Street Journal, 10/15/2021
- Estimated deaths from tuberculosis—the deadliest infectious disease until the emergence of Covid-19—increased for the first time in more than a decade last year, the World Health Organization said Thursday, blaming severe disruptions in treatment and diagnosis caused by the coronavirus pandemic.
- Using statistical models to help compensate for gaps in testing for and reporting of tuberculosis, especially in developing countries, the United Nations’ health agency estimated that around 1.5 million people died last year of the disease.
- That is up from 1.4 million estimated TB deaths in 2019
- If the WHO’s tuberculosis tally is correct, 2020 marked the first increase in global TB deaths since 2005.
Italy Implements Tough Covid-19 Mandate for Workers, Prompting Protests – Wall Street Journal, 10/15/2021
- Italians returned to their workplaces Friday needing to show proof that they have received a Covid-19 vaccine, tested negative or recovered from the virus, a policy that has touched off protests and could provide a preview of a similar mandate planned by the Biden administration.
- In one of the toughest anti-Covid-19 regimes in the Western world, Italy will require all private and public sector workers to have a so-called green pass.
- The new requirement positions Italy, where 85% of people over the age of 12 have received at least one shot, as a test case for how hard Western countries can push their populations to get vaccinated.
- On Friday morning, there were large but peaceful protests at two of Italy’s most important ports, Trieste in the northeast and Genoa in the northwest. With supply chains already under strain around the world, the government has focused attention on workers at the ports and on truckers.
- During the early part of what some in Italy have dubbed “G-Day,” the ports continued to function. A group of people stood outside the port in Genoa chanting, “No green pass” and “Freedom.” In Trieste, about 15% of port workers don’t have the green pass, according to unions.
Toyota cuts November output but sticks to full-year goal – Reuters, 10/15/2021
- Toyota Motor on Friday cut its planned global output for November by as much as 15% due to ongoing chip shortages, but indicated it would ramp up production from December by sticking to its latest full-year production target.
- Japan’s leading carmaker said in a press release it would produce between 100,000 and 150,000 fewer vehicles in November than it had planned for a month that was meant see a rebound in lost output.
- That reduction comes after cuts in September and October as supplies of components from factories in Malaysia and Vietnam slowed because of increased COVID-19 infections there, forcing Toyota to trim its production target for the year to March 31 by 300,000 vehicles to 9 million.
- With the support of President Wilson, the Clayton Antitrust Act, which made it illegal for companies to buy competitors’ stock, was passed. (1914)
- I Love Lucy, starring Lucille Ball and Desi Arnaz, had its television debut. (1951)
- It was announced that Nikita Khruschev was removed from his positions as premier and secretary of the Communist Party of the USSR. (1964)
- Clarence Thomas got a narrow (52–48) Senate confirmation of his nomination to the Supreme Court. (1991)
- China became the third country to launch a staffed space mission. (2003)