US FINANCIAL MARKET

Stocks Creep Up Ahead of Tech Earnings – Wall Street Journal, 10/25/2021

• U.S. stocks edged up Monday ahead of a big week of earnings from major technology companies.
• Stocks flitted between small gains and losses in early trading, but the major indexes were all up slightly by late morning.
• The S&P 500 ticked up 0.2%. The Dow Jones Industrial Average advanced 0.1%.
• The Nasdaq Composite Index added 0.4%, suggesting gains for technology stocks to start the week.
• Strong earnings from banks, consumer companies and manufacturers have soothed investors’ concerns about higher inflation and labor shortages. The S&P 500 and the Dow both hit records last week.
•  Facebook is scheduled to report third-quarter results Monday after markets close. Microsoft, Twitter and Alphabet, Google’s parent company, are scheduled for Tuesday. Apple and Amazon.com are expected to report later in the week.
• Tesla shares climbed nearly 7% to $972.19, on pace to close at an all-time high.
• Hertz said it was ordering 100,000 Teslas, so it can include more electric vehicles in its car-rental fleet.
• The yield on the benchmark 10-year Treasury note ticked lower to 1.631% Monday from 1.654% Friday.
• Yields move inversely to bond prices.
• Brent crude, the global oil benchmark, rose 0.2% to trade around $85.71. Natural gas prices jumped 9% to $5.76.
• Overseas, the pan-continental Stoxx Europe 600 was relatively flat. Among European equities, HSBC rose 1.3% after it reported a jump in third-quarter profit and said it would spend up to $2 billion on stock buybacks.
• In Asia, major benchmarks were mixed. The Shanghai Composite Index added 0.8% while Japan’s Nikkei 225 slipped 0.7%.
• Shares of Panasonic rose 4.9% after the Japanese company said it was manufacturing a more powerful lithium-ion battery that it expected to supply to Tesla.
• The Turkish lira depreciated to its weakest level on record before recovering some ground and trading at around 9.66 lira to the dollar Monday. President Recep Tayyip Erdogan threatened to expel the U.S. ambassador and top diplomats from nine other Western countries over the weekend.

Kimberly-Clark Cuts Forecast Again Amid Inflation, Supply Woes – Bloomberg, 10/25/2021

• Kimberly-Clark tumbled the most in six months after the maker of toilet paper and other household items cut its annual forecast again amid supply-chain disruptions and inflationary pressures.
• Adjusted earnings will be $6.05 to $6.25 a share this year, the company said Monday in a statement as it reported third-quarter results, down from a prior projection of as much as $6.90.
• It was the third consecutive quarter that Kimberly-Clark reduced its guidance.
• The company has been “negatively impacted by significant inflation and supply-chain disruptions that increased our costs beyond what we anticipated,” Chief Executive Officer Mike Hsu said in the statement.
• Kimberly-Clark is raising prices to help counter the effects of a global supply-chain crisis that is “not likely to be resolved quickly.”

PayPal Says Not Pursuing Acquisition of Pinterest – Wall Street Journal, 10/25/2021

• U.S. payments giant PayPal Holdings said it isn’t currently pursuing a deal for social-media platform Pinterest, days after media reports that the companies were in early talks for a multibillion-dollar deal.
• In a one-sentence statement dated Sunday on its website, PayPal said that “in response to market rumors regarding a potential acquisition of Pinterest by PayPal,” the company “is not pursuing an acquisition of Pinterest at this time.”
• PayPal’s stock fell almost 12% in three days after the media reports. Shares of Pinterest, an online-sharing platform on which users share photos and links to recipes and home-decor ideas, closed 13% higher Wednesday, then shed half that gain in the final two days of the week.
• A deal for Pinterest would be one of the biggest mergers of the year, and PayPal’s biggest-ever acquisition.
• Pinterest’s market capitalization stands at more than $37 billion.

Hertz Orders 100,000 Teslas, Part of Plan to Electrify Fleet – Wall Street Journal, 10/25/2021

• Hertz Global Holdings said it has ordered 100,000 Tesla vehicles by the end of 2022, a move aimed at including more electric vehicles in its car-rental fleet.
• The Estero, Fla., company said that starting in early November and expanding through the end of the year, Hertz customers will be able to rent a Tesla Model 3 at airports and other locations in major U.S. markets and some cities in Europe.
• Electric vehicles will comprise more than 20% of the company’s global fleet with the current order, Hertz said Monday.
• The rental-car company said it introduced electric vehicles into its fleet in 2011.
• Hertz said it is also installing thousands of electric-vehicle chargers in its network. Those who rent a Tesla Model 3 will have access to 3,000 Tesla supercharging stations in the U.S. and Europe, the company said.

Shoppers Find Discounts Are in Short Supply This Holiday Season – Wall Street Journal, 10/25/2021

• One side effect of the Covid-19 pandemic heading into the holidays: fewer bargains for shoppers.
• Industry executives and analysts say consumers should expect to pay closer to full price on a range of products this holiday season, including on Nike sneakers, Coach handbags and Ralph Lauren Polo shirts.
• The number of out-of-stock messages online is up 172% compared with January 2020, according to Adobe, which tracks visits to retail websites and product categories.
• Of the 18 categories tracked by Adobe, apparel currently has the highest stock-out levels, followed by sporting goods, baby products, and electronics.
• Adobe expects holiday-season discounts of 5% to 25%, less than the historical range of 10% to 30%.

U.S. Oil Tops $85 as Saudi Arabia Vows Caution on Supplies – Bloomberg, 10/25/2021

• Oil in the U.S. rallied above $85 a barrel for the first time since 2014, another landmark in a surge in global energy prices, while an eye-watering rally in market structure deepened.
• West Texas Intermediate rose as much as 1.6%, while global benchmark Brent also rallied.
• Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman told Bloomberg Television at the weekend that producers shouldn’t take the increase in prices for granted.
• That conservative stance was echoed by both Nigeria and Azerbaijan.
• Goldman Sachs says consumption is on the cusp of returning to pre-Covid levels, while the Organization of Petroleum Exporting Countries and its allies have been restrained in easing the draconian supply cuts imposed in 2020 to salvage prices.

Tesla Supplier Shows Off More Powerful Battery – Wall Street Journal, 10/25/2021

• Tesla supplier Panasonic said it has mostly solved the technology challenges with a larger lithium-ion battery that Elon Musk has called the lowest-cost way to power an electric car.
• Panasonic on Monday showed off for the first time its 4680 cylindrical battery, which gets its name from being 46 millimeters in diameter and 80 millimeters high. It is larger than previous battery cells Panasonic has supplied to Tesla.
• Panasonic plans to start test production of the 4680 battery cells in Japan by March 2022, the head of Panasonic’s battery unit, KazuoTadanobu said.
• He described the product as tailor-made to Tesla’s requirements and said Panasonic planned to supply it to the U.S. company, but he declined to give details.
• During its earnings call in October, Tesla said that it expected vehicles with battery packs composed of 4680 cells to be delivered next year.

Whirlpool Doesn’t See Appliance Shortage Ending Soon – Wall Street Journal, 10/22/2021

• Shortages of dishwashers and refrigerators are likely to stretch well into next year, Whirlpool’s chief executive officer said, as supply-chain problems constrain production and consumer demand remains strong.
• Demand for Whirlpool’s refrigerators, ovens and other appliances lifted the company’s net income 20% higher to $471 million, the company said Thursday, as revenue increased 3.7% to $5.49 billion for the quarter that ended Sept. 30.
• Whirlpool said revenue in North America, which represents roughly 57% of total sales, rose 5.1% in the third quarter to $3.11 billion, buoyed by homebound consumers who continued to make home upgrades and buy more appliances.
• At the same time, Whirlpool is paying more for raw materials, labor and transportation.
• Whirlpool said an adjusted profit measure fell in its latest quarter as higher costs offset increased prices for its products.
• The company said it expects raw material inflation to be about $1 billion this year, and cut its projected revenue growth for the year to 13%, down from 16% forecast in July.
• The company told investors it is planning for revenue growth of up to 6% a year in the long run, excluding acquisitions and currency fluctuations, about double its previous estimate.

Honeywell cuts full-year sales target on parts shortage – Reuters, 10/22/2021

• Honeywell International on Friday cut its full-year sales forecast, as global supply chain disruptions cause a shortage of parts and components for the U.S. industrial conglomerate.
• Net sales rose to $8.47 billion from $7.80 billion a year earlier, but missed analysts’ average estimate of $8.65 billion.
• Honeywell said a shortage of parts had curtailed production in its biggest segment, the aerospace unit.
• It also said an electronic component shortage was hurting its safety and productivity solutions unit, which houses the automation equipment business used by customers including Amazon.
• Excluding one-time items, Honeywell earned $2.02 per share, beating estimates of $1.99 per share for the third-quarter ended Sept. 30, benefiting from a rise in commercial and business aviation.
• The company cut its full-year sales estimates to between $34.2 billion and $34.6 billion, compared with its prior forecast of $34.6 billion to $35.2 billion to “reflect the persistent effects of the macro-challenged environment”.
• Analysts, on average, had expected full-year sales of $35.10 billion, according to Refinitiv IBES estimate.
• Honeywell also narrowed full-year profit forecast range to $8.00 to $8.10, from $7.95 to $8.10 earlier.

Beyond Meat shares bleed on bleak revenue forecast as retail demand dips – Reuters, 10/22/2021

• Beyond Meat on Friday cut its third-quarter revenue forecast, blaming a host of factors including a drop in demand from grocery stores and a labor shortage that led to delays in restocking shelves, sending its shares down 15%.
• The company, which gets the bulk of its revenue from retailing, has suffered from a weakening trend of people stockpiling faux meat burgers and sausages at home as they started dining out.
• It also said new orders from a distributor servicing one of the company’s large customers did not materialize, while severe weather caused damage to inventory stored at one of its facilities.
• Beyond Meat said it now expects third-quarter net revenue of about $106 million, compared with its prior forecast of $120 million to $140 million.
• Beyond Meat, which fell 13% this year up to last close, is due to report its full third-quarter results on Nov. 10.

AmEx beats profit estimates on spending recovery as pandemic curbs ease – Reuters, 10/22/2021

• American Express on Friday reported a higher profit that topped Wall Street estimates for the fourth straight quarter, underpinning a recovery in spending from consumers emboldened by an easing of COVID-19 restrictions.
• Excluding interest expense, the company’s total revenue rose 25% to around $10.93 billion.
• Net interest income, a metric that measures how much credit card companies make from interest payments, rose 6% to $1.99 billion.
• Net income came in at $1.83 billion, or $2.27 per share, for the quarter ended Sept. 30, up 70% from last year.
• Analysts were expecting a figure of $1.80 per share, according to IBES data from Refinitiv.
• The New York-based company released $393 million of reserves in the quarter, reflecting an improved credit outlook overall.

Schlumberger quarterly profit rises as oilfield services demand recovers – Reuters, 10/22/2021

• Top oilfield firm Schlumberger reported a rise in third-quarter adjusted income on Friday, buoyed by higher demand for its services and equipment, as producers capitalize on a rebound in crude prices.
• Revenue of $5.8 billion fell short of analysts expectations of $5.9 billion, but was up 11% year-over-year.
• Schlumberger reported net income of $550 million, or 39 cents per share, for the quarter, edging past Wall Street estimates of 36 cents each, according to Refinitiv IBES.
• Excluding charges & credits, net income came in at $514 million, or 36 cents per share, for the three months ended Sept. 30, higher than $228 million, or 16 cents per share, a year earlier.

Western Digital-Kioxia Deal Talks Stall – Wall Street Journal, 10/22/2021

• Western Digital’s talks to merge with Japanese chip maker Kioxia Holdings in a $20 billion-plus deal have stalled, according to people familiar with the matter.
• The companies, which had been speaking since early this year, were working to finalize a stock deal that would have created a memory-chip powerhouse worth something on the order of $40 billion, The Wall Street Journal reported in August.
• Though the talks are on hold now, they could still be revived, some of the people said.
• Kioxia, formerly part of Toshiba and known as Toshiba Memory, was purchased in 2018 by a group led by private-equity firm Bain Capital for around $18 billion. Toshiba retained a 40% stake in the business, which was renamed Kioxia the following year.

Music Publishers Propose Higher Streaming Payments – Wall Street Journal, 10/22/2021

• The National Music Publishers Association and five major streamers—Spotify Technology, Apple, Amazon.com, Alphabet’s -YouTube and Sirius XM Holdings’ Pandora—this week are duking it out in front of the Copyright Royalty Board, a three-judge panel that sets the statutory licensing rates that digital-service providers pay publishers for on-demand audio streams of their songs.
• The publishers argued in proposals that were due Wednesday at midnight for nearly doubling the current rate, while the streamers are angling to pay less—rates effectively below 2008 levels.
• For years, publishers and songwriters have bristled over payments from streaming and say they are paltry—about one fifth what labels and recording artists collect. The NMPA proposed raising the rate to 40% of what labels are paid.
• The NMPA has proposed that in a given reporting period, streamers pay publishers whichever is the largest of four sums: 20% of their service’s revenue; 40% of what is paid to record labels and other master recording copyright holders; $1.50 per subscriber; or $0.0015 per stream.

Investors Bet Inflation Pressures Will Linger – Wall Street Journal, 10/22/2021

• A key measure of investors’ inflation expectations has climbed in recent weeks, adding fuel to concerns about rising consumer prices.
• As of Thursday, the gauge known as the 10-year break-even rate suggested that the consumer-price index will rise by an annual average of 2.64% over the next decade, according to Federal Reserve Economic Data, or FRED.
• That is up from a recent low of 2.28% in late September and the highest level since 2012.
• The break-even rate is found by looking at the difference in yields between nominal Treasury bonds and Treasury inflation-protected securities, or TIPS.
• The rate is so called because TIPS holders can earn the same return as holders of nominal Treasuries if average annual CPI inflation matches that gap over the life of the bonds.