Daily Market Report | Nov. 10, 2020

US FINANCIAL MARKET

Stocks Wobble as Investors Grow Cautious – Wall Street Journal, 11/10/20

  • U.S. stocks wobbled Tuesday, with elevated Covid-19 infection levels, muted stimulus expectations and caution about the timing of vaccines tempering the exuberance that left major indexes hovering near record highs one day earlier.
  • The U.S. reported more than 100,000 coronavirus cases for the seventh straight day and hospitals face an uptick in patients. That is triggering speculation that local authorities from New York to California may reinstitute some lockdown measures to curb the outbreak.
  • Expectations that a Covid-19 vaccine could accelerate the global economic recovery led to a reordering of winners and losers Monday. Stocks of travel companies, retailers and banks were among the main beneficiaries. Tech companies, which have fueled most of this year’s market rally, are looking like laggards this week.
  • In bond markets, yields on the 10-year Treasury note ticked down to 0.952%, from 0.957% on Monday.
  • Government bonds sold off sharply in the first trading session of the week, pushing yields to their highest levels since mid-March.

Coronavirus Live Updates: U.S. Cases Above 100,000 for Seventh Day in a Row – Wall Street Journal, 11/10/20

  • The U.S. reported more than 100,000 coronavirus cases for the seventh day in a row as the virus spread rapidly in many areas of the country and several states hit daily infection records.
  • Nearly 120,000 new cases were reported nationwide for Monday, as the total number of confirmed cases topped 10.1 million, according to data compiled by Johns Hopkins University.
  • Daily caseloads hit record levels in Pennsylvania, Tennessee, Colorado, New Mexico and Maine, according to Johns Hopkins.
  • In California, new cases rose by more than 8,000 Monday for the first time since Aug. 19.
  • Hospitalizations have shot up nearly 25% since the beginning of the month. As of Monday, 59,275 people were hospitalized due to Covid-19, the largest number since July 25, according to the Covid Tracking Project.
  • Intensive-care units around the country are also facing an upsurge in patients due to the pandemic. As of Monday, 11,533 people were being treated in ICUs in the U.S., the highest number since May 8.
  • World-wide, the global death toll neared 1.3 million and total confirmed cases approached 51 million, according to data compiled by Johns Hopkins University.

Beyond Meat posts surprise loss as stockpiling eases, restaurant sales falter – Reuters, 11/9/20

  • Beyond Meat posted a surprise quarterly loss and lower-than-expected sales on Monday, hurt by weaker demand for its plant-based meat at restaurants and retail stores after a surge at the start of the COVID-19 pandemic.
  • Net sales rose 2.7% to $94.4 million, but widely missed the $132.81 million estimate.
  • After a nearly 200% rise in retail sales in the last quarter, growth eased to 40.5% in the third quarter, as consumers who had stocked up their freezers with Beyond Meats sausages, burgers and meatballs at the start of the pandemic, slowed purchases.
  • U.S. restaurant sales fell 11.1% in the quarter, while Beyond spent more than expected to deal with the fallout of weak demand from restaurants.
  • Excluding items, the company posted a loss of 28 cents per share compared with analysts’ expectations of a 5-cent profit.

D.R. Horton beats quarterly profit, sees 2021 sales above estimates – Reuters, 11/10/20

  • D.R. Horton on Tuesday reported a better-than-expected quarterly profit and forecast 2021 home sales above estimates on record low mortgage rates, while warning of risks to the market from coronavirus infections and restrictions.
  • Home sales rose 26% to 20,248 units.
  • D.R. Horton said it expects home sales in fiscal year 2021 to be between 77,000 and 80,000 units, compared with analysts’ average estimate of 75,981, according to IBES data from Refinitiv.
  • It also declared a quarterly cash dividend of $0.20 per share, a 14% jump compared to its last payout, as net income attributable to the company rose to $829 million, or $2.24 per share, in the quarter from $505.3 million, or $1.35 per share, a year earlier.

Occidental posts larger-than-expected loss as COVID-19 hits prices – Reuters, 11/9/20

  • Occidental Petroleum posted a bigger-than-expected quarterly loss on Monday, as it reeled from a plunge in crude prices due to the COVID-19 crisis, sending the oil and gas producer’s shares 5% lower in extended trading.
  • The average price for the company’s crude oil plunged about 31.5% to $38.67 per barrel in the third quarter, while worldwide production from continuing operations rose 11.2% to 1.24 million barrels of oil equivalent per day (boepd).
  • Net loss attributable to stockholders widened to $3.8 billion, or $4.07 cents per share, in the third quarter, from $912 million, or $1.08 cents per share, a year earlier.
  • The results included a one-time charge of about $2.4 billion related to its investment in Western Midstream Partners LP and $700 million of losses for some divestitures.
  • Occidental said it expects production in the current quarter to be between 1.1 million boepd and 1.16 boepd, and reiterated its full-year spending plan of $2.4 billion to $2.6 billion.

Nikola’s Losses Widen as Executives Try to Regain Momentum, Develop First Truck – Wall Street Journal, 11/9/20

  • Electric-truck startup Nikola reported wider losses in the third-quarter, a tumultuous period in which company executives came under pressure to respond to questions about the legitimacy of its business.
  • Nikola reported no revenue for the quarter.
  • The company said it had $908 million in cash at the end of the period, a figure that includes roughly $263 million raised during the quarter through redeemed warrants.
  • The company reported a $117.5 million net loss in the third quarter, compared with a $15.5 million loss in the same year-ago period, as it continues to spend heavily on developing its first semi-truck model, the all-electric Nikola Tre, and expanding its workforce.
  • The U.S. Justice Department and Securities and Exchange Commission have initiated inquiries into whether Nikola misled investors, The Wall Street Journal and others have reported.

Simon Property’s results miss due to unpaid rents, retail bankruptcies – Reuters, 11/9/20

  • America’s largest mall operator Simon Property Group on Monday missed quarterly estimates for earnings and lease income, as retailers ravaged by the COVID-19 pandemic shut stores, paid lower rents or delayed payments.
  • Simon said the leasing environment was improving, with the mall operator signing long-term and pop-up lease deals with leading brands, including names like Prada, Ferrari and UGG.
  • For the third quarter, however, mall and premium outlet occupancy was 91.4%, down from 92.9% recorded in the previous quarter, largely due to bankruptcies of some of its biggest tenants.
  • Lease income fell about 24% to $993.8 million, compared with the estimate of $1.08 billion, according to IBES data from Refinitiv.
  • Funds from operations was at $2.05 per share, well below the estimate of $2.28.

Apple Event: New Mac Computers Expected with In-House Processing Power – Wall Street Journal, 11/10/20

  • While excitement for Apple’s new iPhones has helped boost the company’s share price to record highs, a nearly 40-year-old workhorse with stagnating sales in recent years is notching impressive growth: the Mac.
  • At 1 p.m. EST, the Mac lineup is going to get its biggest jolt in years, with the expected introduction of laptops with Apple’s own microchips, technology that is supposed to give the devices faster performance, better battery life and, maybe, bigger profits.
  • The arrival of the new devices will mark a breakup in Apple’s 15-year relationship with Intel, which Apple co-founder Steve Jobs tapped in 2005 to improve performance in Apple computers, then the company’s primary business.
  • Custom Apple chips should allow the company to save $150 to $200 per computer, Mark Vena, an analyst for Moor Insights & Strategy, said. That savings could help fund more features in the new computers or boost profitability, he said.

Europe charges Amazon with using its dominance and data to squeeze rivals – Reuters, 11/10/20

  • The European Union has charged Amazon with damaging retail competition, accusing the U.S. company of using its size, power and data to give it an unfair advantage over smaller merchants that sell on its online platform.
  • The European Commission has been investigating Amazon’s dual role – as a marketplace for merchants and also a rival seller.
  • The regulator looked into how the company collects data on competitors that sell on its platform, offering everything from electronics and toys to food and kitchenware.
  •  It says that Amazon uses that sensitive information, which shows what is proving popular or not, to better target its own products.
  • A final EU decision could come next year. Amazon faces being fined up to 10% of its global turnover if found guilty of breaching antitrust rules. However, it can avoid a hefty penalty and a finding of wrongdoing by offering concessions to settle.

Spotify to buy ad tech firm Megaphone to monetize podcasts – Reuters, 11/10/20

  • Sweden-based Spotify Technology has agreed to buy podcast advertising and publishing platform Megaphone, it said on Tuesday, the latest in a series of a deals to boost its podcast platform.
  • The company will use Megaphone’s technology to create targeted ads, it said, and will also make its proprietary ad monitoring tools available to third-party podcast publishers.
  • Since last year, Spotify has spent hundreds of millions of dollars to buy companies like Gimlet Media, a podcast producer, and Ringer, the sports and entertainment podcast network founded by sports writer Bill Simmons.

Targeted Ads Headed Soon to Network TV – Wall Street Journal, 11/10/20

  • The television industry’s Holy Grail—targeted advertising in which next-door neighbors could see different commercials during the same TV show—is expected to become a reality next year as a big wall to widespread implementation is about to come down.
  • Nielsen, the nation’s leading TV-ratings firm, on Tuesday said it would start measuring such targeted advertising on a national basis next year. The lack of a national measurement system for such ads has been a hurdle for brands and networks.
  • The new system will mark a fundamental shift in how Nielsen tabulates commercial viewership. Instead of calculating an average audience for all ads in a program as is the current practice, it will measure each ad individually, which is necessary for targeted advertising to work.
  • The move is expected to boost the value of TV commercials, which have been under pressure as broadcast and cable networks have been losing viewers to streaming services and brands have flocked to digital advertising.

Ford to add jobs to boost output of electric F-150, add electric van – Reuters, 11/10/20

  • Ford Motor said on Tuesday it plans to hire 350 more U.S. workers to expand production capacity for its electric F-150 pickup truck in Michigan and add assembly of electric commercial vans at a plant near Kansas City, Missouri.
  • The company said it also will add a second vehicle at the Mexican factory that is already set to build the Mustang Mach-E electric sport utility vehicle. Ford did not disclose how many people would be hired to build the additional vehicle in Mexico, which would “share a similar electrifed platform” as the Mach-E.
  • Ford will increase production capacity for an electric version of its F-150 large pickup by 50% from its original plans, adding another 200 permanent jobs at a complex near its headquarters in Dearborn, Mich.
  • The electric F-150, scheduled to go on sale in 2022, will compete with electric pickups planned by Tesla, General Motors, Fiat Chrysler and several startup companies, in a segment that was not on most automakers’ product plans just a few years ago.

US ECONOMY & POLITICS

U.S. job openings rise slightly in September – Reuters, 11/10/20

  • U.S. job openings increased moderately in September and layoffs appeared to abate, pointing to a gradual labor market recovery from the COVID-19 pandemic.
  • Job openings, a measure of labor demand, were up 84,000 to 6.4 million on the last day of September, the Labor Department said on Tuesday in its monthly Job Openings and Labor Turnover Survey, or JOLTS.
  • Vacancies remained below their 7 million level in February.
  • The job openings rate was unchanged at 4.3% in September.
  • Layoffs dropped 200,000 to 1.3 million. The layoffs rate fell to 0.9% from 1.1% in August.

Biden’s Team Pressures Trump Administration to Declare Him Election Winner – Wall Street Journal, 11/10/20

  • A standoff between Joe Biden and President Trump over the results of the election is complicating the president-elect’s ability to prepare for the White House.
  • Three days after the Associated Press and other media outlets declared Mr. Biden the winner of the 2020 election, the Trump administration has declined to make a typically routine technical designation that would grant the former vice president crucial transition resources. Mr. Trump hasn’t conceded the race.
  • Trump administration officials have instructed federal agencies not to move forward with transition activities with Mr. Biden’s team until a winner is formally identified by the GSA, according to people familiar with the matter.
  • On Monday, Mr. Trump’s presidential campaign filed a lawsuit in Pennsylvania, where the AP said Mr. Biden had enough votes to be declared the winner, asking a federal court to stop certification of Pennsylvania’s election results until mail-in ballots in Philadelphia and Allegheny counties are reviewed.
  • Attorney General William Barr on Monday authorized federal prosecutors to pursue “substantial allegations” of voting and vote-tabulation irregularities before the 2020 presidential election is certified, saying in a memo reviewed by The Wall Street Journal that investigations “may be conducted if there are clear and apparently credible allegations of irregularities that, if true, could potentially impact the outcome of a federal election in an individual state.”
  • No evidence of widespread voter fraud has surfaced.

Trump Fires Mark Esper as Defense Secretary – Wall Street Journal, 11/9/20

  • President Trump dismissed Defense Secretary Mark Esper on Monday, saying in a Twitter post that he had “terminated” his Pentagon chief and replaced him with a new acting secretary, signaling the start of a shake-up in the remaining weeks of the Trump administration.
  • The acting secretary appointed by Mr. Trump is Christopher Miller, who had just become the director of the National Counterterrorism Center in August after being confirmed by the Senate.
  • Mr. Esper was one of several top administration officials and Trump appointees to draw the wrath of the president.
  • Mr. Trump also has openly speculated about firing Federal Bureau of Investigation Director Christopher Wray, with whom he has disagreed on a number of issues from Russian election interference to the threat posed by left-wing protesters and allegations of voter fraud.

EUROPE & WORLD

Adidas cautious for year end as pandemic returns – Reuters, 11/10/20

  • Adidas expects sales to fall in the last three months of the year as coronavirus lockdowns return in Europe and despite forecasting a return to growth in China and strong demand for running gear and products designed by singer Beyonce.
  • Third-quarter sales fell by a currency-neutral 3% to 5.96 billion euros ($7.05 billion), while operating profit fell 12% to 794 million euros, ahead of average analyst forecasts for 5.91 billion and 723 million euros respectively.
  • Adidas expects a similar level of sales decline in the fourth quarter as long as more than 90% of its stores stay open and shopper numbers are not hit too much by new lockdowns. About 93% of its global stores are currently open, but only 60% in Europe.
  • The German sportswear firm said it expects a fourth-quarter operating profit of between 100 million and 200 million euros, lower than most analysts were expecting.
  • Ecommerce sales jumped 51%, with two-thirds of online sales in Europe and the United States coming through its loyalty program, which now has 150 million members.

Ericsson aims for margin jump beyond 2022 as it sets new targets – Reuters, 11/9/20

  • Sweden’s Ericsson is targeting an operating margin excluding restructuring charges of between 15% and 18% beyond 2022, it said ahead of Tuesday’s capital markets day.
  • The company, which maintained its 2022 operating margin of 12-14%, excluding charges, boosted its margin forecast from its networks business as telecom operators across the world upgrade to next-generation 5G technology.
  • The 2022 operating margin target for Networks was raised to 16-18% from 15-17%.
  • On the flip side, it reduced its margin target for its digital services business to 4-7% from 10-12% in 2022.

Huawei to sell smartphone unit for $15 billion to Shenzhen government, Digital China, others – sources – Reuters, 11/10/20

  • Huawei plans to sell budget-brand smartphone unit Honor in a 100 billion-yuan ($15.2 billion) deal to a consortium led by handset distributor Digital China and the government of its home town of Shenzhen, people with knowledge of the matter told Reuters.
  • The plan comes as U.S. restrictions on supplying Huawei force the world’s second-biggest smartphone maker – after South Korea’s Samsung Electronics – to focus on high-end handsets and corporate-oriented business, the people said.
  • It also indicates little expectation for any swift change in the U.S. perception of Huawei as a security risk following a new U.S. administration, one of the people said.
  • The all-cash sale will include almost all assets including brand, research & development capabilities and supply chain management, the people said. Huawei could announce it as early as Sunday, one of the people said.

Factmonster – TODAY in HISTORY

  • Hirohito was crowned Emperor of Japan. (1928)
  • The Great Wall of China opened to the world for tourism. (1970)

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