Daily Market Report | Nov. 11, 2020
US FINANCIAL MARKET
U.S. Stocks Rise, Led by Tech Sector – Wall Street Journal, 11/11/20
- Technology shares lifted major indexes Wednesday after lagging earlier this week as promising vaccine news sent U.S. stocks rallying.
- Megacap tech stocks powered markets higher through 2020 but took a hit earlier this week as investors cheered progress toward a Covid-19 vaccine and began rotating into cyclical sectors such as manufacturing and energy.
- The rollout of a Covid-19 vaccine is likely to power the global economic recovery and lift stocks across sectors, giving momentum to a new leg of the market’s rally, investors said.
- Still, some investors are focusing on the hurdles facing making a vaccine widely available, and questions about the size of the next fiscal stimulus package.
- Coronavirus hospitalizations set a record in the U.S. on Tuesday, a fresh reminder that the pandemic is far from over.
- The main benchmarks in both Hong Kong and China ended the day lower. Shares in some of China’s biggest tech companies fell sharply for a second day.
- The move echoed a pullback in U.S. tech stocks on Tuesday, and came after China released new draft antimonopoly rules for online platforms. The rules signaled an increased appetite by Beijing authorities to rein in its dominant technology companies.
Coronavirus Live Updates: U.S. Cases Hit Another Record High – Wall Street Journal, 11/11/20
- The U.S. set another single-day record for coronavirus cases, as the total number of new infections topped 136,000, while hospitalizations due to Covid-19 were at their highest level since the pandemic began.
- Texas became the first state in the country to surpass one million cases, according to Johns Hopkins. California now has the second-highest number of cases in the U.S., with more than 990,000.
- Daily caseloads for Tuesday hit record levels in Illinois, Ohio, Colorado, Montana and Wyoming, according to Johns Hopkins. And the number of new cases on Guam also continued to rise rapidly with the U.S. territory reporting 180 new cases on Tuesday, bringing its total to 5,659.
- Hospitalizations, up around 30% since the beginning of the month, reached 61,964 as of Tuesday, exceeding the previous high of 59,940 reached on April 15, according to the Covid Tracking Project. A summer surge also saw hospitalizations reach just shy of 60,000 in July.
- Intensive-care units are also facing an upsurge in patients due to the pandemic, with 11,952 people in ICUs in the U.S. as of Tuesday, the highest number since May 7.
- The U.S. death toll surpassed 239,000 as 1,420 new fatalities were reported Tuesday, the highest daily figure since Aug. 12.
Lyft’s Pandemic Challenges Continue, but Business Is Improving – Wall Street Journal, 11/10/20
- Lyft’s active riders and revenue improved in the third quarter from the previous three months as coronavirus shutdowns eased in some cities, but business remained sharply down from a year earlier because of the pandemic.
- Third-quarter revenue almost halved to $500 million from $955.6 million, but rose 47% from the second quarter.
- The San Francisco-based ride-hailing company said Tuesday it had 12.5 million active riders in the three months ended Sept. 30. That compares with 22.3 million in the year-earlier period and 8.7 million riders in 2020’s second quarter.
- Mr. Zimmer said that riders were taking shorter trips during the pandemic, resulting for the third quarter in a 7% year-over-year drop in revenue per active rider to $39.94.
- Lyft’s third-quarter net loss narrowed to $460 million from $463.5 million a year earlier, as the company cut 17% of its workforce and trimmed other costs during the pandemic.
- However, its adjusted loss before interest, taxes, depreciation and amortization widened to $240 million from $128.1 million.
Boeing loses more 737 MAX orders, eyes jet’s U.S. return but Europe tariffs loom – Reuters, 11/10/20
- Boeing lost another 12 orders for its grounded 737 MAX jetliner in October, and delivered 13 aircraft to customers, down from the 20 jets delivered in the same month a year ago, company data showed on Tuesday.
- Airbus sold 11 jets last month and booked 72 jet deliveries, easing concerns over a cash-depleting overhang of unwanted jets.
- Boeing said it lost orders for four 737 MAX jets from China Development Bank Financial Leasing Co, one from Czech Airlines owner Smartwings, three from Oman Air, and four from an undisclosed buyer or buyers.
- Canceled MAX orders, including those where buyers converted to a different model, was 448 jets – and 460 for all jets across Boeing’s portfolio, Boeing said.
- For 2020 through October, the number of MAX orders canceled, or removed from Boeing’s official backlog when it applies stricter accounting standards, stood at 1,043 aircraft.
Apple launches MacBook laptops powered by its own computing chips – Reuters, 11/10/20
- Apple on Tuesday introduced a MacBook Air notebook and other machines with its first central processor designed in-house for Macs, a move that will tie its computers and iPhones closer together technologically.
- The new chip, called the M1, marks a shift away from Intel technology that has driven the electronic brains of Mac computers for nearly 15 years.
- The MacBook Air will start at $999, the same as its predecessor, and have up to twice the battery life, Apple said. The M1 will also power the MacBook Pro notebook, which starts at $1299, and its $699 Mac Mini computer, which comes without a monitor.
- Apple executives said on Tuesday that the M1 was intended to be efficient as well as fast, to improve battery life, and that Apple’s newest version of its operating system was tuned to the processor.
OPEC Deepens Forecast for Drop in Global Oil Demand – Wall Street Journal, 11/11/20
- Coronavirus lockdown measures in Europe and weakening consumption in the Americas will result in global oil demand taking a larger hit in 2020 than previously expected, the Organization of the Petroleum Exporting Countries said Wednesday.
- In its closely-scrutinized monthly report, OPEC deepened its forecast for a drop in global oil demand in 2020 by 300,000 barrels a day to 9.8 million barrels a day, a 10% drop from last year’s levels.
- The cartel also softened its forecast rebound in demand for 2021 by 300,000 barrels a day.
- Those cuts, when combined with the Vienna-based organization’s resilient non-OPEC supply forecasts and its cut to its 2021 global growth rebound forecast—now 4.4% from 4.5% previously—present a dismal outlook for oil markets in the coming months.
- OPEC hedged its forecasts, saying that “further [economic] support, currently unaccounted for, may come from an effective and widely distributable vaccine as soon as the first half of 2021.”
U.S. power use to drop over 3% in 2020 due coronavirus: EIA – Reuters, 11/11/20
- U.S. electricity consumption will decline 3.6% this year as coronavirus lockdowns cause businesses to close, the U.S. Energy Information Administration said on Tuesday in its Short Term Energy Outlook (STEO).
- The EIA projected power demand will drop to 3,813 billion kilowatt hours (kWh) in 2020 from 3,957 billion kWh in 2019 before rising to 3,849 billion kWh in 2021.
- Those declines follow a 1.2% drop in usage in 2019 due to mild weather from 2018’s record 4,003 billion kWh, according to data going back to 1949.
- EIA said natural gas’ share of generation will rise from 37% in 2019 to 39% in 2020 before dropping to 33% in 2021 as gas prices increase, while coal’s share will slide from 24% in 2019 to 20% in 2020 before rising to 25% in 2021.
- Nuclear’s share of generation will rise from 20% in 2019 to 21% in 2020 before sliding back to 20% in 2021, while renewables will rise from 18% in 2019 to 20% in 2020 and 22% in 2021.
BMW unveils electric SUV to challenge Tesla, plans U.S. launch in early 2022 – Reuters, 11/11/20
- German luxury automaker BMW AG unveiled on Wednesday an electric sport utility vehicle (SUV) called the BMW iX, planned to go on sale in the United States in early 2022 to compete with Tesla Inc and other rivals.
- BMW said the iX should have a driving range of 300 miles (480 km). That’s less than the estimated driving range of the Tesla Model X Long Range, which is rated at 371 miles in the United States.
- BMW said drivers would be able to add 75 miles of range in ten minutes at a fast-charging station.
- BMW said the iX would be comparable in size to the current BMW X5 SUV. The dashboard will be a sweeping, curved screen.
US ECONOMY & POLITICS
Biden Says Standoff with Trump Administration Won’t Stop Transition – Wall Street Journal, 11/11/20
- Joe Biden called President Trump’s unwillingness to concede the presidential election an “embarrassment” but said it wouldn’t impede his White House transition, despite a standoff with the administration that is preventing the president-elect’s team from accessing key resources.
- The Trump administration hasn’t issued a typically routine technical designation that would allow Mr. Biden’s staff to view detailed classified information, send representatives to embed with government agencies and have the State Department facilitate calls with foreign leaders. The delay could also hamper Mr. Biden’s selection of cabinet officials because the ability to conduct background investigations for security clearances is frozen.
- The president-elect said he would name “at least a couple” of choices for his cabinet before Thanksgiving. He is also expected to detail top White House positions including chief of staff in the coming days.
- The Trump campaign said Tuesday night it was filing a federal lawsuit in Michigan seeking to block the certification of election results until a review of ballots could be conducted.
EU lawmakers back U.S. lobster deal after Biden election win – Reuters, 11/11/20
- European Union lawmakers have backed a small trade deal with the United States to remove EU tariffs on U.S. lobsters following Democrat Joe Biden’s victory in the U.S. presidential election.
- Under an agreement struck in August, the EU plans to remove tariffs of 8%-12% on imports of lobsters, while the United States will halve its duties on imports of certain glassware, ceramics, disposable lighters and prepared meals.
- The deal, worth some $200 million in annual trade, needs to be approved by the European Parliament and by the European Council, the grouping of EU governments.
- Parliamentary backing had been in doubt given strained relations between the bloc and the administration of U.S. President Donald Trump, which has imposed punitive tariffs on EU steel and aluminium.
EUROPE & WORLD
Hong Kong Opposition Resigns from Legislature Over Latest Beijing Crackdown – Wall Street Journal, 11/11/20
- Beijing forced the expulsion of four pro-democracy Hong Kong lawmakers, prompting the rest of the opposition bloc to resign in protest at China’s intensifying crackdown on dissent in the city.
- Hong Kong’s government Wednesday said that the democratically elected legislators had been disqualified with immediate effect. The government announced the move minutes after China’s legislature passed a resolution that empowered local officials to unseat dissenting politicians without going through the courts.
- Slamming Beijing’s decision as another assault on the freedoms China had guaranteed the former British colony until 2047, the group of 19 pro-democracy legislators said that quitting was the biggest possible protest they could make.
- The resignations leave the city’s mostly pro-Beijing legislature as effectively a rubber stamp for government policy and laws.
- The move threatens to upend decades of rough-and-tumble legislative politics in the city—where the opposition has at times delayed, amended and even thwarted government legislation.
Alibaba boasts over $70 billion sales as first post-virus Singles’ Day nears end – Reuters, 11/11/20
- China’s Alibaba said orders on its e-commerce platforms during the Singles’ Day shopping extravaganza had exceeded $70 billion by Wednesday evening, as lockdown-weary consumers splashed out on as many as 16 million discounted goods.
- The world’s biggest sales event – eclipsing Black Friday and Cyber Monday in the United States – spans four main days this year, and so far has brought sellers 20 times as many orders by value than Amazon.com’s two-day global Prime Day last month.
- It set primary discount days for Nov. 1 through Nov. 3 as well as the usual Nov. 11, and is calculating gross merchandise volume (GMV) over all 11 days.
- As of 20:05 p.m. (1305 GMT) on Nov. 11, GMV had hit 467.5 billion yuan ($70.59 billion), Alibaba said. Earlier, it said orders were peaking at a record 583,000 per second. Over 2 million products featured in the sale for the first time – double last year.
Tencent Music revenue beats estimates as paid subscribers jump – Reuters, 11/10/20
- China’s Tencent Music Entertainment Group reported on Tuesday a better-than-expected quarterly revenue as it added more paying users to its music streaming service, at a time when people are largely homebound due to the COVID-19 pandemic.
- While its revenue rose to 7.58 billion yuan ($1.15 billion) in the third quarter ended Sept. 30 from 6.51 billion yuan ($910 million) last year, paid subscribers in the company’s online music service jumped 46% to 51.7 million.
- Analysts had expected revenue of 7.47 billion yuan, according to IBES data from Refinitiv.
- Excluding items, the company earned 0.80 yuan per American Depository Share, above estimates of 0.71 yuan per ADS.
BAE Systems slightly raises earnings forecast – Reuters, 11/10/20
- British defense company BAE Systems slightly raised its profit forecast, saying demand for its capabilities remained high and orders for military kit this year, including Germany’s plan to purchase new Typhoon jets, had exceeded expectations.
- For 2020, BAE had previously forecast underlying earnings per share to be a mid-single digit percentage lower than last year’s result of 45.8 pence, but said on Wednesday they would now be “slightly higher than previously guided”.
- BAE Systems said it expected growth to continue under the next administration in the U.S., its biggest market, accounting for over 40% of sales and where it recently expanded with two acquisitions.
- In the UK, its second biggest market, it said the outlook was stable as a government review into defense and security was ongoing.
- Its limited exposure to UK-EU trading meant the impact of the end of the Brexit transition period on the group would also be limited.
Toshiba’s second-quarter profit down 64% on pandemic, below estimates – Reuters, 11/11/20
- Japan’s Toshiba on Wednesday reported a 64% drop in quarterly operating profit as the industrial conglomerate struggled with the impact of the COVID-19 pandemic.
- Operating profit for the second quarter ended September came to 15.75 billion yen ($149.84 million), down from 44.23 billion yen in the same period a year prior.
- That compared with a 23.30 billion yen average of five analyst estimates compiled by Refinitiv.
- Toshiba maintained its profit forecast for the year ending March at 110 billion yen, down 15.7% from a year earlier.
- The outlook compared with a consensus estimate of 131.03 billion yen from 12 analysts.
- A new midterm business plan released on Wednesday targets operating profit of 400 billion yen in the year through March 2026, with the ratio of profit to sales at 10%, by expanding businesses related to renewable energy, medicine and quantum cryptography.
Asian leaders to sign China-backed trade deal amid U.S. election uncertainty – Reuters, 11/11/20
- Southeast Asian leaders start meetings on Thursday that are expected to lead to an ambitious China-backed trade deal at a time the still uncertain election result in the United States leaves questions over its engagement in the region.
- Leaders of the 10-member Association of South East Asian Nations (ASEAN), China, Japan, South Korea, Australia and New Zealand are scheduled to conclude talks on the Regional Comprehensive Economic Partnership (RCEP) this Sunday.
- The deal, which is expected to be signed later on Sunday on the sidelines of a mostly online, four-day ASEAN summit in Hanoi, will take years to complete but will progressively lower tariffs across many areas and could become the world’s biggest trade agreement.
- The 15 participating RCEP countries make up nearly a third of the world’s people and account for 29% of global gross domestic product. China is already the biggest source of imports and destination for exports for would-be RCEP members.
Factmonster – TODAY in HISTORY
- The Mayflower Compact was signed by Pilgrims aboard the Mayflower. It would provide the basis for all governments of the American colonies. (1620)
- The Allies and Germany signed an armistice ending World War I. (1918)
- The Tomb of the Unknown Soldier was dedicated in Arlington National Cemetery. (1921)
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