Daily Market Report | November 16, 2021
US FINANCIAL MARKET
Stocks Edge Higher as Retail Sales Grow – Wall Street Journal, 11/16/2021
- U.S. stocks rose on Tuesday after a report on consumer spending raised hopes for the holiday-sales season, despite the bite in consumers’ wallets from inflation.
- The Dow Jones Industrial Average rose 0.4%, and the S&P 500 rose 0.3%, a day after the benchmark index closed at its fifth-highest level on record. The technology-focused Nasdaq Composite Index rose 0.2%.
- Retail sales rose 1.7% in October, the Commerce Department said, suggesting consumers weren’t put off buying by rising inflation. Walmart and Home Depot reported higher sales.
- Government bond yields fell, pivoting from a recent advance. Yields on benchmark 10-year Treasury notes fell to 1.603% Tuesday from 1.621% Monday. Yields move in the opposite direction of prices.
- Energy markets were volatile. European natural gas prices jumped almost 10% after German regulators suspended the certification process for a new pipeline linking Russia to Germany.
- Traders had hoped that Nord Stream 2, which is completed but not operational, would start to send gas toward Western Europe in the coming months.
- Overseas stock markets were mixed. Gains for telecom and auto stocks pushed the pan-European Stoxx Europe 600 up 0.2%. Vodafone Group rose more than 5% after the U.K. telecom company raised its guidance for the 2022 fiscal year.
- Thyssenkrupp jumped 12% after a media report said the German conglomerate was looking to list its electrolysis unit.
- Hong Kong’s Hang Seng rose 1.3%, Japan’s Nikkei 225 edged up 0.1% and China’s Shanghai Composite Index fell 0.3%.
Walmart Raises Forecast and Says Shelves Are Stocked for Holiday Shoppers – Wall Street Journal, 11/16/2021
- Walmart reported another quarter of higher sales, as it raised prices for some products and consumers shopped early for the winter holidays.
- Total revenue hit $140.5 billion in the quarter, up from $134.7 billion in the same period last year.
- Comparable sales, those from U.S. stores and digital channels operating for at least 12 months, increased 9.2% in the quarter ended Oct. 29 compared with the same period last year. U.S. e-commerce sales rose 8% from a year ago, when shoppers flooded online because of the pandemic.
- More shoppers visited stores than they did in the same period last year, with traffic up 5.7% and spending per trip up 3.3%, a sign that shopping habits may be normalizing after last year’s extreme shifts in buying behavior.
- U.S. inventory rose 11.5% in the quarter as “preparation for an expected strong holiday season,” the company said.
- Walmart’s net income for the quarter fell to $3.1 billion from $5.1 billion in the same period last year when it booked a gain on investments. Without such items, adjusted earnings a share for the quarter hit $1.45.
- Walmart raised its full-year guidance for earnings a share to around $6.40 compared with a previous range set earlier this year of $6.20 to $6.35.
Home Depot Sales Rise, Continuing Pandemic Streak – Wall Street Journal, 11/16/2021
- Home Depot results were better than expected in the latest quarter, a sign that the home-improvement retailer could be avoiding the worst effects of the supply-chain snarls reverberating across the economy.
- Home Depot’s total sales in the quarter of $36.82 billion were up by 9.8% year over year, and were more than a third higher than in the same stretch of 2019, before Covid-19 emerged.
- At stores that have been open for at least a year, sales grew by 6.1% in August through October, including by 5.5% at stores in the U.S.
- Home Depot’s sales growth boosted its bottom line, pushing profits higher. The company logged quarterly earnings of $4.13 billion, or $3.92 a share, compared with $3.43 billion, or $3.18 a share, in 2020’s third quarter.
Activision CEO Bobby Kotick Knew for Years About Sexual-Misconduct Allegations at Videogame Giant – Wall Street Journal, 11/16/2021
- Bobby Kotick, the longtime chief executive of videogame giant Activision Blizzard, received a troubling email in July 2018.
- A lawyer for a former employee at Sledgehammer Games, an Activision-owned studio, alleged in the email that her client had been raped in 2016 and 2017 by her male supervisor after she had been pressured to consume too much alcohol in the office and at work events.
- The female employee reported the incidents to Sledgehammer’s human-resources department and other supervisors, but nothing happened, according to the email, which threatened a lawsuit against the company.
- Within months of receiving the email, said people familiar with the situation, Activision reached an out-of-court settlement with the woman, who also had reported one of the incidents to the police.
- Mr. Kotick didn’t inform the company’s board of directors about the alleged rapes or the settlement, said people with knowledge of the board.
Ohio Sues Meta Alleging Facebook Parent Misled Public About Its Products’ Effect on Children – Wall Street Journal, 11/16/2021
- Ohio’s attorney general is suing Meta Platforms, formerly known as Facebook, alleging the company misled the public about how it controlled its algorithm and the effects its products have on children.
- The lawsuit, filed on behalf of Meta investors and the Ohio Public Employees Retirement System, seeks more than $100 billion in damages and demands that Meta make significant changes so as to not mislead investors again, Ohio Attorney General Dave Yost said in a statement.
- The lawsuit alleges that between April 29 and Oct. 21, 2021, Facebook and its executives violated federal securities law by intentionally misleading the public about the negative impact of its products on minors in an effort to boost its stock and deceive shareholders.
- “Facebook said it was looking out for our children and weeding out online trolls, but in reality was creating misery and divisiveness for profit,” Mr. Yost, a Republican, said.
US ECONOMY & POLITICS
U.S. Shoppers Boosted Spending Last Month, Taking on Higher Prices – Wall Street Journal, 11/16/2021
- American consumers spent more at the start of the holiday shopping season, brushing off concerns about higher prices at retailers last month.
- Sales at U.S. retail stores, online sellers, and restaurants rose by a seasonally adjusted 1.7% in October compared with the previous month, the Commerce Department said. Consumers continued their stepped-up spending despite continued Covid-19 fears and inflation concerns.
- Spending rose sharply, by 4%, at online retailers, along with big gains at electronics, appliance and hardware stores. Grocery-store sales rose by 1.1% while restaurant and bar sales were flat. Other gains occurred at gas stations, where sales rose 3.9%, and auto dealerships, with a 1.8% gain.
- Core retail sales, a measurement that excludes spending on autos, gasoline, building materials and food services, were up 1.6%, showing that consumers increased discretionary spending in addition to taking on higher prices for necessary goods.
U.S. manufacturing output races to 2-1/2-year high – Reuters, 11/16/2021
- Production at U.S. factories rebounded more than expected in October as the drag from Hurricane Ida faded and motor vehicle output picked up, but manufacturing continues to be constrained by shortages of raw materials and labor.
- Manufacturing output surged 1.2% last month to its highest level since March 2019, after falling 0.7% in September, the Federal Reserve said on Tuesday. Economists polled by Reuters had forecast manufacturing production rising 0.7%.
- Output increased 4.5% compared to October 2020. Manufacturing, which accounts for 12% of the U.S. economy, is being underpinned by businesses desperate to rebuild depleted inventories.
- Production at auto plants rebounded 11.0% last month after declining for two straight months. Excluding autos, manufacturing output rose 0.6% in October.
- Capacity utilization for the manufacturing sector, a measure of how fully firms are using their resources, increased 0.9 percentage point in October to 76.7%, the highest since January 2019.
- Overall capacity use for the industrial sector rose to 76.4% from 75.2% in September. It is 3.2 percentage points below its 1972-2020 average.
U.S. import prices surge in October on petroleum, food – Reuters, 11/16/2021
- U.S. import prices surged in October as the costs of petroleum products and food increased, adding to signs that inflation could remain high for a while.
- Import prices accelerated 1.2% last month after gaining 0.4% in September, the Labor Department said on Tuesday. In the 12 months through October, prices jumped 10.7% after rising 9.3% in September. Economists polled by Reuters had forecast import prices, which exclude tariffs, increasing 1.0%.
- Imported fuel prices soared 8.6% last month after increasing 3.9% in September. Petroleum prices advanced 8.1%, while the cost of imported food rose 0.8%.
- Excluding fuel and food, import prices gained 0.3%. These so-called core import prices were unchanged in September and were up 5.0% on a year-on-year basis in October.
Biden Signs $1 Trillion Infrastructure Bill Into Law – Wall Street Journal, 11/16/2021
- President Biden signed into law a roughly $1 trillion infrastructure bill to repair the nation’s aging roads and bridges, upgrade the electrical grid and expand access to broadband internet.
- The legislation, the largest federal investment in infrastructure in more than a decade, is a central component of Mr. Biden’s domestic-policy agenda and marks a rare bipartisan policy win for the White House.
- The infrastructure package includes about $550 billion above projected federal spending on roads, bridges, expanded broadband access and more.
- It will be paid for with a variety of revenue streams, including more than $200 billion in repurposed funds originally intended for coronavirus relief but left unused; about $50 billion from delaying a Trump-era rule on Medicare rebates; and $50 billion from certain states returning unused unemployment insurance supplemental funds.
- The law includes $110 billion in funding for roads, bridges and major projects, as well as $39 billion to modernize and make public transit more accessible to the disabled and elderly.
U.S. Homebuilder Sentiment Increases to a Six-Month High – Bloomberg, 11/16/2021
- Confidence among U.S. homebuilders rose to a six-month high in November on stronger sales and foot traffic even as labor and supply-side challenges delay completion times and drive up costs.
- A gauge of builder sentiment rose to 83 from an October reading of 80, National Association of Home Builders/Wells Fargo data showed Tuesday. It marked the third-straight increase.
- A measure of current single-family home sales rose to the highest since February, while a gauge of prospective buyer traffic increased to a five-month high.
- The component assessing sales expectations for the next six months held steady at 84, the highest since December.
Fed’s Bullard Urges More Hawkish Policy to Offset Inflation Rise – Bloomberg, 11/16/2021
- Federal Reserve Bank of St. Louis President James Bullard said the central bank should speed up its reduction of monetary stimulus in response to a surge in U.S. inflation.
- “I think it behooves the committee to go in a more hawkish direction in the next couple of meetings so we are managing the risk of inflation appropriately,” Bullard, who votes on monetary policy in 2022, said in a Bloomberg Television interview with Michael McKee, Lisa Abramowicz and Tom Keene on Tuesday.
- The Federal Open Market Committee earlier this month that it would begin tapering the $120 billion-a-month bond-buying program it put in place last year in the early days of the Covid-19 pandemic.
- The planned pace of reduction puts it on track to cease purchases entirely by the mid-2022.
- “We could move faster — we kept optionality on this that we could speed up the taper if it is appropriate,” said Bullard, noting he had proposed an end of the tapering of bond-buying by March.
Inflation Set to Spoil Holidays for Struggling U.S. Families – Bloomberg, 11/16/2021
- Retailers are forecasting a record holiday spending season. But for one in ten Americans, prices rising at the fastest pace in 30 years will dampen the Christmas spirit.
- Inflation is especially taking a toll on lower-income families, who spend roughly a third of their earnings on essentials like food and energy. It’s eating into recent wage increases, and the timing couldn’t be worse after federal pandemic relief expired for about 7.5 million people.
- The holiday season will lay bare inequalities in the economic recovery. That’s because a majority of Americans flush with over $2 trillion in excess savings accumulated during the pandemic are ready to splurge on gifts and holiday trips.
- At the same time, more than 11% of Americans don’t plan to spend at all, the greatest share in at least 10 years and more than double that in 2020, according to a Deloitte LLP survey.
EUROPE & WORLD
Czechs Weigh Austria-Style Lockdown for Unvaccinated – Bloomberg, 11/15/2021
- The Czech government is considering several options of stricter rules for people who aren’t vaccinated against Covid-19, ranging from harsh steps to only a mild tightening of measures, according to outgoing Prime Minister Andrej Babis.
- One of the alternatives is a similar regime to the one imposed in neighboring Austria, which limits the movement and activities of those who have refused inoculation, Babis told a televised news conference after a government meeting on Monday.
- Some cabinet members are advocating softer steps, such as no longer accepting antigen tests for sporting and cultural events or restaurant visits.
- The government will meet again on Thursday to debate new measures as it tries to slow the spread of the coronavirus.
More Than 10,000 Australians Want Compensation for Vaccine Side Effects: Report – Bloomberg, 11/16/2021
- Australia’s government may face a more than A$50 million ($37 million) bill related to its Covid-19 vaccination program, as thousands of people register for compensation for health issues related to their inoculations, the Sydney Morning Herald reported.
- More than 10,000 people have registered for a government program to be compensated for lost income after being hospitalized for rare but significant side effects from the jab, the paper reported, citing official data.
- The TGA has received 288 reports assessed as likely to be heart inflammation linked to the Pfizer Inc. vaccine, as well as 160 of rare clotting disorder thrombosis with thrombocytopenia syndrome (TTS) linked to the AstraZeneca vaccine.
- New South Wales, the country’s most populous state, on Tuesday reported 212 Covid-19 cases, while Victoria recorded 797.
BMW fourth quarter off to good start, sees double-digit 2021 margins – CFO – Reuters, 11/16/2021
- BMW’s October sales came in better than expected and November sales are off to a good start, the carmaker’s CFO said on Tuesday, adding he expected the company to reach the upper end of its 9.5% to 10.5% automotive profit forecast this year.
- Such margins were unlikely to last, though easing supply chain bottlenecks for semiconductor chips in the second half of 2022 could still boost growth, Chief Financial Officer Nicolas Peter said at a roundtable with journalists in Frankfurt.
- The company expects electric vehicle sales to at least double in 2022 and plans increase the prices for all its new cars by an average of 1%, the CFO said.
- He also said BMW’s planned increase of its stake in China joint venture BMW Brilliance to 75% from 50% should take place in the first quarter of 2022, when the country drops the rule blocking foreign ownership of more than 50% of local companies.
Factmonster – TODAY in HISTORY
- General Sherman and his troops began their “March to the sea” during the Civil War. (1864)
- Oklahoma became the 46th state. (1907)
- The United States and the Soviet Union established diplomatic relations. (1933)
- President Nixon signed the bill authorizing the construction of the Trans-Alaska Pipeline. (1973)
- President George W. Bush nominated Condoleezza Rice to replace Colin Powell as secretary of state. (2004)
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