US FINANCIAL MARKET
U.S. Stocks Waver as Election-Week Rally Pauses – The WSJ, 11/6/20
- U.S. stocks pared losses Friday as the sharpest weekly rally since April was interrupted as investors focused on the still-undecided presidential election, surging Covid cases and fresh jobs numbers.
- Stock futures pared their losses after the latest jobs report showed hiring picked up last month at a stronger pace than expected.
- The unemployment rate fell to 6.9% in October, better than the 7.7% figure economists had forecast.
- The U.S. economy added 638,000 jobs in October, more than the 530,000 projected.
- Stocks have vaulted higher as the prospect of a split Congress reduced the chances of a corporate-tax hike should Democratic candidate Joe Biden win the presidency.
- Mr. Biden gained a lead over President Trump in Georgia and Pennsylvania early Friday morning.
- He was also leading in Arizona and Nevada, putting him within striking distance of the 270-electoral college votes needed to win the White House.
- All three major stocks indexes are up at least 6% for the week.
- The U.S. recorded another record-high day of newly reported coronavirus infections Thursday, with nearly 121,888 infections, according to data compiled by Johns Hopkins University.
- The tally is 18.5% higher than Wednesday’s 102,831. More than 1,200 deaths were reported on Thursday.
- In corporate news, shares of T-Mobile US jumped almost 6% after the company said it continued to add customers in the third quarter and told investors the cost-cutting plan it launched in the wake of its Sprint takeover is running ahead of schedule.
Coronavirus Live Updates: U.S. Cases Top 120,000 in a Day – Wall Street Journal, 11/6/20
- The U.S. recorded another record day of newly reported coronavirus infections Thursday, a nearly 20% increase from a day earlier.
- Thursday’s 121,888 newly reported infections, according to data compiled by Johns Hopkins University, bring the U.S. total to more than 9.6 million.
- It is the third day in a week the U.S. has set a daily record. Last Friday’s tally was 99,321.
- With 53,322 people hospitalized, a number not seen since early August, hospitals in the South and Midwest are scrambling to accommodate a surge of new patients. Face masks are once again in short supply in many parts of the country.
- More than 1,200 deaths were reported on Thursday, according to Johns Hopkins data, a figure not seen since mid-September following sharp increase in the summer.
- States in the Midwest are being hit particularly hard—with many reporting record-high infection counts on Thursday—including Illinois, Ohio, Indiana, Minnesota, Iowa, Oklahoma, Nebraska and North Dakota. Several others have reported record-high daily figures in recent days.
- Overall, 13 states posted record-high numbers on Thursday, according to Johns Hopkins.
For Uber, Coronavirus Pandemic Is Still Weighing on Rides Business – Wall Street Journal, 11/5/20
- Uber Technologies posted another big loss as the coronavirus pandemic continued to batter its core ride-hailing business, though its shares rose for a second straight day on the back of a key regulatory win in California.
- Revenue dropped 18% to $3.13 billion.
- Gross bookings for Uber’s rides declined 53% year-over-year in the three months that ended Sept. 30, the San Francisco-based company said after markets closed Thursday.
- That was better than the previous quarter, when rides were down 75%.
- Bookings at the delivery arm, Uber Eats, more than doubled year-over-year and advanced 23% from the previous quarter.
- But the uptick wasn’t enough to offset decreases elsewhere, resulting in a 10% decline in overall bookings.
- Net losses for the period narrowed to $1.09 billion compared with $1.16 billion a year ago, in part because of aggressive cost cuts this year. Uber has shed roughly a quarter of its staff during the pandemic.
Square third-quarter profit tops estimates, shares up 7% – Reuters, 11/5/20
- Square shares rose 7% in extended trading on Thursday after the company’s third-quarter profit beat estimates, helped by growth in online payments and its consumer business Cash App.
- The company said revenue in the quarter more than doubled to $3.03 billion, beating estimates of $2.07 billion.
- The company, led by Twitter Chief Executive Jack Dorsey, processed a total of $31.7 billion in payments in the third quarter, up 12% from a year ago.
- In international markets, seller payment volumes grew 46% in the third quarter of 2020.
- Square’s net income rose 24% to $36.5 million, or 7 cents per share, in the quarter ended Sept. 30.
T-Mobile beats phone subscriber estimates, shares rise 7% – Reuters, 11/5/20
- T-Mobile US on Thursday added more phone subscribers than analysts had expected in the third quarter, as demand for its services picked up with people staying at home due to the COVID-19 pandemic.
- Total revenue rose to $19.27 billion (£14.66 billion) from $11.06 billion in the year-ago quarter, beating analyst estimates of $18.34 billion, according to IBES data from Refinitiv.
- T-Mobile added a net 689,000 so-called postpaid phone customers during the quarter ended Sept. 30, above analyst estimates of 422,000, according to research firm FactSet.
- T-Mobile’s net income rose to $1.25 billion, or $1.00 per share, in the third quarter, from $870 million, or $1.01 per share, a year earlier.
- The wireless carrier increased its guidance for the second half of 2020, and said it now expects postpaid phone net customer additions to be between 1.3 million and 1.4 million, including 600,000 to 700,000 in the fourth quarter.
ViacomCBS beats on revenue, nearly hits annual streaming subscriber target – Reuters, 11/6/20
- ViacomCBS beat analysts’ estimates for quarterly revenue on Friday and nearly reached its annual streaming subscription target a full quarter ahead of time as lockdowns boosted demand for indoor entertainment.
- Total revenue fell 9% to $6.12 billion in the three months ended Sept. 30, but came above estimates of $5.94 billion, according to Refinitiv IBES data.
- Streaming and digital video revenue, which includes the subscription-based streaming services, jumped 56% to $636 million, while revenue from advertisement across the company took a $145 million hit in the third quarter.
- The company said its domestic streaming services, CBS All Access and Showtime, had 17.9 million subscribers at the end of the third quarter. It had earlier forecast 18 million paid customers by the end of the year.
Take-Two raises annual adjusted sales forecast on lockdown boost – Reuters, 11/5/20
- Take-Two Interactive Software on Thursday raised its annual adjusted revenue forecast after beating quarterly estimates, betting on strong demand for its games “Grand Theft Auto V” and “NBA 2K21” this holiday season from stay-at-home gamers.
- On an adjusted basis, the game publisher reported revenue of $957.5 million for the second quarter ended Sept. 30, beating estimate of $856.6 million.
- Take-Two raised its full-year adjusted revenue forecast to a range of $3.15 billion to $3.25 billion from $2.80 billion to $2.90 billion. Analysts on average estimate $3.04 billion, according to IBES data from Refinitiv.
EA second-quarter adjusted sales fall short of estimates – Reuters, 11/5/20
- Electronic Arts on Thursday reported quarterly adjusted sales below Wall Street estimates, as big-budget publishers compete to tap the lockdown-led surge in videogame sales.
- The company’s adjusted revenue for the second quarter ended Sept. 30 dropped 30.7% to $910 million, missing analysts’ average estimate of $971.3 million, according to IBES data from Refinitiv.
- The company expects holiday-quarter adjusted sales to be at $2.35 billion, compared with estimates of $2.33 billion, betting on robust demand for its sports titles “Madden NFL 21” and “FIFA 21”.
- EA also said its board had approved a new two-year program to repurchase up to $2.6 billion of its common stock and declared a cash dividend of 17 cents per share.
Peloton warns of supply constraints after meteoric demand – Reuters, 11/5/20
- Exercise bike maker Peloton Interactive on Thursday warned of near-term supply constraints, as demand for its at-home fitness equipment has shot up due to gym closures during the pandemic.
- Peloton’s total quarterly revenue surged more than three-fold to $757.9 million.
- Net profit attributable to Class A and Class B shareholders was $69.3 million, or 20 cents per share.
- Analysts on average had estimated the company to report a profit of 11 cents per share on a revenue of $734.2 million for the quarter.
- The exercise bike maker’s Connected Fitness revenue jumped 274% to $601.4 million in the quarter while its subscriptions climbed 137% to $1.33 million.
- The company raised its 2021 revenue forecast and said revenue would be at least $3.9 billion, compared with its previous forecast range of $3.50 billion to $3.65 billion.
Coty Curbs Sales Declines and Turns a Profit – Wall Street Journal, 11/6/20
- Struggling beauty giant Coty showed signs of improving in the most recent quarter even as pandemic-related shutdowns of retailers continued to exacerbate a longer-term sales slide.
- Revenue was $1.69 billion, down from $1.94 billion in last year’s fourth quarter. Analysts had forecast revenue of $1.08 billion.
- Organic sales in the company’s luxury division, which strips out currency moves and deals, fell 25% year over year in the latest quarter, while consumer-beauty sales were down 10%.
- Sales of Wella hair-care products grew 6.5% to $566.4 million in the quarter as salons reopened and were flooded by customers overdue for haircuts and coloring. Excluding that business, Coty’s organic sales fell 19%.
- Coty recorded a profit of 24 cents a share in the quarter ended Sept. 30, compared with 7 cents a share a year earlier. On an adjusted basis, Coty’s profit was 11 cents a share.
CVS Taps Aetna Executive Karen Lynch as Next CEO – Wall Street Journal, 11/6/20
- CVS Health on Friday named Karen Lynch, chief of the company’s Aetna insurance arm, as its next CEO, as the pharmacy giant navigates the coronavirus pandemic and a shifting health-care landscape.
- The announcement came as CVS said sales rose 3.5% to $67.06 billion in the quarter ended Sept. 30 as more diagnostic testing during the Covid-19 pandemic helped boost the company’s retail business.
- Revenue in the segment that includes the retail drugstores climbed 5.9% to $22.73 billion as higher prescription volumes, general-merchandise sales and more diagnostic testing boosted the business.
- Revenue for the segment that includes Aetna climbed by 8.8% amid membership growth in government products.
- For the latest quarter, CVS’s profit was $1.22 billion, or 93 cents a share, down from $1.53 billion, or $1.17 a share, in the same three-month period a year earlier.
- The company offered a more optimistic outlook for the rest of the year, reporting that it now expects a full-year adjusted profit of $7.35 a share to $7.45 a share in 2020.
Marriott posts surprise profit on cost cuts, improved bookings – Reuters, 11/6/20
- Marriott International on Friday reported a surprise third-quarter profit, helped by cost cuts and a near doubling of occupancy rates in its North American hotels from the previous quarter as leisure travel rebounded on easing COVID-19 curbs.
- Revenue slumped 57.3% to $2.25 billion but topped Wall Street’s expectation of $2.23 billion.
- Occupancy rates in North America, its biggest market, rose to 37% in the third quarter ended Sept. 30, from 19.6% in the second quarter.
- Greater China was Marriott’s best-performing market in the reported quarter, as occupancy rates jumped to 61.4% from 35.5% in the second quarter.
- Marriott’s total expenses fell 57.2% to about $2 billion in the reported quarter, while net profit dropped by 74% to $100 million, or 31 cents per share.
Hershey reinstates full-year outlook after strong third-quarter sales – Reuters, 11/6/20
- Hershey on Friday beat quarterly profit and sales estimates and reinstated its full-year outlook boosted by strong Halloween sales and demand for chocolate chips and syrups from people taking up baking while stuck at home due to virus-driven lockdowns.
- Net sales rose 4% to $2.22 billion in the third quarter ended Sept. 27, beating analyst expectations of $2.16 billion, per Refinitiv data. Organic sales – which excludes the impact of M&A and currency fluctuations- rose 3.8%
- U.S. retail sales rose 6.6% in the quarter to Oct. 4, driven by strong sales of Hershey’s chocolate brands, which increased 9.8%, and baking items including peanut butter, syrup, chips and cocoa, which rose 15.7%, the company said.
- Excluding items, the company earned $1.86 per share, above the $1.72 estimate.
- It forecast full-year net sales to rise about 1% anticipating organic sales growth in the fourth quarter to be similar to that in the third quarter. Adjusted earnings per share is expected to rise between 7% and 8% or to $6.18 and $6.24 per share.
Vimeo raises $150 million as parent IAC looks to spin it off – Reuters, 11/6/20
- IAC/InterActiveCorp said on Thursday it was considering spinning off its stake in the online video platform Vimeo that raised $150 million from Thrive Capital and Singapore’s GIC at a $2.75-billion valuation.
- IAC also reported a quarterly revenue rise of 11.8% to $788.4 million, beating analysts’ estimates of $766.7 million, according to Refinitiv IBES data.
- Revenue from IAC’s largest unit, ANGI Homeservices, increased 9% to $389.9 million, beating analysts’ estimates of $383.1 million.
Dish Network Stems Pay-TV Defections – Wall Street Journal, 11/6/20
- Dish Network’s low-cost online television service bucked the cord-cutting trend while its new wireless service shrank during the company’s first full quarter as a cellphone carrier.
- Overall revenue, helped by the addition of the wireless business, rose to $4.53 billion from $3.17 billion a year earlier.
- The Englewood, Colo., company posted a net gain of 116,000 pay-TV customers in the three months ended Sept. 30, as a roughly 203,000-subscriber gain at Sling TV offset a net decline of 87,000 satellite subscribers.
- Dish’s fledgling wireless cellphone business shed 212,000 subscribers over the same period. The company closed the quarter with 9.4 million retail wireless subscribers, most of them under its Boost Mobile brand.
- In the third quarter, net income attributable to Dish jumped to $505 million, or 86 cents a share, from a year-earlier profit of $353 million, or 66 cents a share.
Ford’s Chinese ventures October sales jump as SUVs, vans lead demand recovery – Reuters, 11/5/20
- Ford Motor’s Chinese ventures reported higher vehicle sales for October from a year earlier, as strong demand for sport-utility vehicles (SUVs) and vans continued to support its recovery in the world’s biggest auto market.
- The Dearborn, Michigan-based automaker’s Chongqing-based venture with Changan said on Thursday it sold 26,305 vehicles last month, a 43% jump year-on-year.
- Jiangling Motors Corp (JMC), in which Ford owns a stake, said in a filing earlier this week it sold 34,008 vehicles last month, up 26% on year. Overall auto sales are expected to grow 11.4% on year in October.
Muni Bonds Falter on Prospect of Divided Government in Washington – Wall Street Journal, 11/6/20
- The prospect of a divided government in Washington has been received rapturously in the stock market this week, but it hasn’t made municipal-bond investors happy.
- Prices on bonds issued by states and local governments fell relative to Treasurys in the immediate aftermath of the election and then settled at pre-election levels, but didn’t receive the bump many analysts had expected would follow in the event of a sweep by Democrats.
- Yields on 10-year AAA, tax-exempt municipal bonds were 109.1% of 10-year Treasury rates Wednesday, up 2.4 percentage points from Tuesday, according to Municipal Market Data, reflecting an increase in investor concern about the risk of munis relative to U.S. government bonds.
- The importance of the Senate to muni prices was made clear Thursday. Yields slipped to 106.5% of 10-year Treasury rates as the day wore on and results in Georgia pointed to potentially two runoffs that could hand the Senate majority to Democrats come January.
US ECONOMY & POLITICS
U.S. job growth slows in October; part-time workers increase – Reuters, 11/6/20
- The U.S. economy created the fewest jobs in five months in October and more Americans are working part time, the clearest evidence yet that the recovery from the pandemic recession was slowing as fiscal stimulus ends and new COVID-19 cases explode.
- Nonfarm payrolls increased by 638,000 jobs last month after rising by 672,000 in September. A 271,000 increase in leisure and hospitality jobs accounted for about two-fifths of the payrolls gain last month.
- The unemployment rate fell to 6.9% from 7.9% in September. But it continued to be biased down by people misclassifying themselves as being “employed but absent from work.”
- Without this recurring mistake, the government said the jobless rate would have been about 7.2% in October.
- The number of people out of work for more than six months surged by 1.2 million to 3.6 million in October.
- The number of people working part time for economic reasons increased by 383,000 to 6.7 million, reflecting reduced hours because of slack work or business conditions.
Fed Says Virus Poses Considerable Risks, Maintains Low-Rate Pledges – Wall Street Journal, 11/6/20
- The Federal Reserve said the coronavirus pandemic poses considerable risks for the U.S. economy despite recent gains, and officials made no changes on Thursday to their commitment to provide sustained stimulus.
- Fed Chairman Jerome Powell said they were monitoring two prominent risks to the recent rebound in economic activity: one from rising infection rates and another from households exhausting savings after earlier fiscal relief measures had dissipated.
- This week, Fed officials continued discussions this week over how to provide more support to the economy should the recent rebound fizzle, Mr. Powell said.
- They could do this by adjusting their purchases of $120 billion a month in Treasury and mortgage-backed securities if needed.
White House in reach for Biden as he takes leads in Pennsylvania, Georgia – Reuters, 11/6/20
- Democratic presidential candidate Joe Biden took the lead over President Donald Trump in the battleground states of Pennsylvania and Georgia for the first time on Friday, putting him on the verge of winning the White House.
- Biden would also win the election if he prevails in two of the three other key states where he held narrow leads on Friday: Georgia, Arizona and Nevada. Like Pennsylvania, all three were still processing ballots on Friday.
- In Arizona, Biden’s lead had narrowed on Thursday to about 47,000 votes, and in Nevada he was ahead by about 11,500.
- In Pennsylvania, Biden moved ahead of Trump by 5,587 votes on Friday morning, while in Georgia, he opened up a 1,097-vote lead. Both margins were expected to grow as additional ballots were tallied.
Control of U.S. Senate Hinges on Georgia Results – Wall Street Journal, 11/5/20
- The fight for control of the U.S. Senate now is centered on Georgia, where the state’s close election has pushed at least one, and possibly two, of its Senate races to Jan. 5 runoffs.
- The outcome of those two races could shift the balance of power in the Senate, as Democrat Jon Ossoff tries to unseat Republican Sen. David Perdue, and Democrat Raphael Warnock faces off against Republican Sen. Kelly Loeffler.
- Under Georgia law, if no candidate gets more than 50%, the two top vote getters, regardless of party, compete in a runoff to be held on Jan. 5.
- The Warnock-Loeffler race already is headed for a runoff, as the Associated Press projected Tuesday. Mr. Perdue’s share of the vote was at 49.88% as of late Thursday, with about 16,105 outstanding ballots still to be counted, according to the Georgia Secretary of State’s Office. Mr. Ossoff was at 47.81%.
- Democrats so far have locked down 48 seats, leaving the two Georgia races as their best hopes to reach 50.
Pelosi Faces Lawmakers Frustrated Over Loss of House Seats – Wall Street Journal, 11/5/20
- Democratic lawmakers expressed frustration with party leaders over the loss of several congressional seats, saying House Speaker Nancy Pelosi and others oversold their prospects and didn’t adequately protect members from being attacked as socialists.
- House Republicans had picked up a net gain of five seats by late Thursday, flipping seven districts held by Democrats and shrinking the Democrats’ majority.
- Two of those were in the Miami area where Democrats overall had a poorer-than-expected showing.
- The loss of seats could complicate Mrs. Pelosi’s plans to remain speaker for one more term, which she has pledged would be her last.
- During an hourslong Democratic call on Thursday, lawmakers peppered leaders with questions and vented their frustrations over the week’s losses. Since Tuesday night, Democrats have been wrestling with why polling had been overly optimistic, and why the party’s brand wasn’t strong enough to withstand attacks labeling its candidates as socialists.
Judge Orders SBA to Release Names of All PPP Borrowers, Precise Loan Amounts – Wall Street Journal, 11/6/20
- The Small Business Administration must release detailed information for all Paycheck Protection Program loans, including names of borrowers and precise loan amounts, a federal judge ruled Thursday.
- The SBA had previously released detailed information only for PPP loans above $150,000, a fraction of the loans issued. The ruling also applies to loans under the SBA’s Economic Injury Disaster Loan program.
- The judge set a Nov. 19 deadline for the SBA to release the information on all individuals and entities that received a coronavirus-related loan through the PPP and EIDL program.
- Of the program’s 5.2 million loans, roughly 4.5 million were for amounts of $150,000 or less, according to SBA data.
EUROPE & WORLD
Toyota more than doubles full-year profit outlook – Reuters, 11/5/20
- Toyota Motor more than doubled its full-year operating forecast on Friday amid a rebound in sales in China that were hit by the coronavirus pandemic earlier this year, even as it reported second-quarter operating profit slid 24%.
- In the July-September quarter, operating profit fell to 506 billion yen from 662.4 billion in the same period a year earlier, according to Reuters’ calculations, as sales dipped amid the coronavirus impact globally.
- Japan’s biggest automaker said it now expects operating profit of 1.3 trillion yen ($12.6 billion) for the year through March 2021, up from a previous prediction for a 500 billion-yen profit.
- That is above an average estimate for a 1.25 trillion-yen profit compiled from 26 analysts polled by Refinitiv.
Honda doubles profit forecast, boosted by China rebound – Reuters, 11/5/20
- Honda Motor on Friday more than doubled its full-year operating profit forecast as it reported second-quarter earnings grew 28% amid a rebound in China after auto sales were squeezed by the impact of the coronavirus pandemic.
- For the second quarter, operating profit came in at 283 billion yen, up from 220 billion yen in the same period a year earlier.
- Japan’s third-biggest automaker said it now forecasts a full-year operating profit of 420 billion yen ($4.06 billion) up from a previous prediction of a 200 billion yen profit.
- For the full business year, Honda said it expects to sell 4.6 million cars. That’s up from a previous forecast of 4.5 million, but still below the 4.79 million sold the previous year.
Singapore Airlines sinks to record quarterly loss on pandemic, impairments – Reuters, 11/6/20
- Singapore Airlines reported on Friday a record S$2.34 billion ($1.74 billion) net loss for the July-September quarter, hit by a plunge in passenger numbers due to the COVID-19 pandemic and impairments charges on older aircraft.
- The loss compared with a S$94.5 million profit in the same period last year. Revenue tumbled 81% to S$783.8 million.
- The loss included an impairment charge of S$1.3 billion related to the withdrawal of 26 older aircraft, including seven Airbus A380 superjumbos.
- Singapore Airlines, which lacks a domestic market to cushion it against coronavirus border closures, reported a 98.6% fall in passenger numbers in September, and a 42.3% drop in the amount of cargo carried. It was running just 11% of normal passenger capacity that month.
EasyJet scales back flying capacity due to lockdowns – Reuters, 11/5/20
- British airline easyJet said recently announced lockdowns in England, Germany and France had forced it to scale back its already reduced flying schedule, and it would now fly no more than 20% of capacity for the rest of the year.
- EasyJet’s 20% capacity guidance for the rest of the year is lower than the 25% plan laid out in October, as a surge in the virus has brought new restrictions. At 20%, its plan is behind bigger competitor Ryanair which is aiming for 40%.
- The low level of travel due to the pandemic this year is putting increasing strain on the airline’s finances. It also said on Friday that it had raised cash of 131 million pounds ($171.99 million) from a sale and leaseback deal of 11 aircraft.
Sharp reports 17% drop in second-quarter operating profit, beats analyst estimates – Reuters, 11/5/20
- Japan’s Sharp reported on Friday a 17.1% drop in second-quarter operating profit as the coronavirus pandemic continued to hurt sales of automotive displays and office printers.
- The maker of sensors, camera modules and screens for Apple’s iPhones posted an operating profit of 18.5 billion yen ($178.67 million) for the July-September quarter, down from 22.3 billion yen a year earlier.
- Sharp maintained its operating profit forecast for the year through March 2021 at 82 billion yen, versus a consensus analyst estimate of 64.37 billion.
Nippon Steel cuts full-year loss forecast, automaker demand picks up – Reuters, 11/6/20
- Japan’s biggest steelmaker Nippon Steel on Friday halved its business loss forecast for the year to March 31 and raised its annual crude steel output plan, helped by strong recovery in steel demand from automakers.
- Its crude steel output plunged 32% to 14.64 million tonnes.
- The world’s No.3 steelmaker now expects a business loss of 60 billion yen ($580 million) for this year, down from its August estimate of 120 billion yen.
- The company also raised its annual crude steel output forecast to 32.7 million tonnes on a parent basis from 31.8 million tonnes, as a blast furnace in Kimitsu, eastern Japan would resume, as would another in Muroran in northern Japan, later this month.
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