Daily Market Report | Nov. 20, 2020

US FINANCIAL MARKET

U.S. Stocks Drop Amid Fresh Lockdowns – Wall Street Journal, 11/19/20

  • U.S. stocks fell Thursday as new restrictions imposed to curb rising coronavirus infection levels weighed on the economic outlook.
  • The U.S. logged more than 170,000 newly reported Covid-19 cases for the second time on Wednesday, and the death toll crossed the quarter-million mark.
  • States are implementing a patchwork of new restrictions to combat its spread. Kentucky, Minnesota, Wisconsin and Illinois are adopting measures including extended mask mandates, bar and restaurant closures and limits on private gatherings.
  •  Pfizer’s plans to seek authorization for its Covid-19 vaccine within days sparked optimism in markets earlier in the week.
  • But a resurgence of virus cases prompted New York City authorities to temporarily close public schools starting Thursday, stoking concerns that local governments will be forced to shut down portions of the economy.
  • Jobless claims figures showed a jump last week, with initial claims for unemployment benefits rising to 742,000.
  • The report came amid signs the economic recovery is continuing, but losing steam after rebounding strongly in the third quarter from the pandemic-induced downturn this spring.
  • Meanwhile, sales of previously owned homes rose to a new 14-year high in October and median home prices again hit new highs.

Coronavirus Live Updates: U.S. Infections Set Another Daily Record – Wall Street Journal, 11/20/20

  • The U.S. logged its highest number of newly reported Covid-19 infections in a day and reported record hospitalizations for the 10th day in a row, as the coronavirus pandemic surges through the country.
  • The U.S. reported 187,833 new cases for Thursday, according to data compiled by Johns Hopkins University, exceeding its last daily record by more than 10,000.
  • That record was set last Friday, when the U.S. reported 177,224 new cases.
  • There were 80,698 people hospitalized with the disease as of Thursday, according to the Covid Tracking Project, crossing the 80,000 mark for the first time just nine days after first passing 60,000.
  • The U.S. has set records for hospitalizations each day since Nov. 10, according to the project’s data.
  • More states added restrictions to try to curb the virus’s spread, including Rhode Island, New Hampshire and Maine, as the latest surge hit New England.
  • California Gov. Gavin Newsom issued a new stay-at-home order that will require the vast majority of residents to stay at home and businesses to close between 10 p.m. and 5 a.m.
  • In Ohio, lawmakers passed a bill Thursday aimed at limiting Gov. Mike DeWine’s stepped-up response to the pandemic, in the latest challenge to the governor’s tighter restrictions on businesses and residents.
  • The U.S. reported 2,015 deaths from Covid-19 on Thursday, bringing its total to 252,555.

CDC Urges Americans Not to Travel for Thanksgiving – Wall Street Journal, 11/19/20

  • The Centers for Disease Control and Prevention strongly urged Americans Thursday not to travel for Thanksgiving, in one of its sharpest warnings to date, as an official said the agency is alarmed by the exponential growth in Covid-19 cases, as well as rising hospitalizations and deaths.
  • About 50 million Americans are expected to travel in the coming days, which is traditionally the busiest travel period of the year.
  • Public-health officials’ warnings have taken on a more urgent tone in recent weeks, shifting from officials discouraging travel and large gatherings to outright pleading with the public to stay put and stay away from others.

Pfizer to Seek Authorization of Covid-19 Vaccine Friday – Wall Street Journal, 11/20/20

  • Pfizer said it plans to ask U.S. health regulators on Friday to permit use of its Covid-19 vaccine, a milepost in months of frantic efforts to find a medicine that could beat back a rampaging pandemic.
  • Once the company files, it would be up to the U.S. Food and Drug Administration to decide whether the two-shot vaccine works safely enough to roll out to millions of people.
  • Pfizer said the filing could allow for distribution to begin by the middle to end of December.

WHO Recommends Against Use of Gilead Covid-19 Drug Remdesivir – Wall Street Journal, 11/19/20

  • The World Health Organization said Thursday it recommends against the use of remdesivir, the antiviral drug for Covid-19 made by Gilead Sciences, after concluding that there isn’t evidence that the drug reduces deaths or recovery times.
  • The WHO said a panel of international experts that advise the agency on treatments based its recommendation on data from four international clinical trials comparing the effects of several drug treatments.
  • Remdesivir “has no meaningful effect on mortality or on other important outcomes for patients, such as the need for mechanical ventilation or time to clinical improvement,” the WHO said.
  • Gilead said remdesivir is recognized as the standard of care for hospitalized Covid-19 patients by health organizations in the U.S., Japan, U.K. and Germany, based on multiple studies published in peer-reviewed journals.

Airlines Flag Falling Bookings as Covid-19 Cases Climb – Wall Street Journal, 11/20/20

  • Travelers are calling off holiday trips as Covid-19 case counts surge around the country, threatening U.S. airlines’ last hopes for bringing in more revenue this year.
  • United Airlines Holdings became the latest carrier on Thursday to report that bookings have slowed and cancellations have risen over the last week amid a nationwide surge in Covid-19 cases.
  • Southwest Airlines said last week that new bookings have slowed and has said cancellations have picked up.
  • Alaska Air Group said Thursday that renewed state and local restrictions on travel and public gatherings have “negatively impacted demand in the immediate term.”
  • Airline executives say they are not surprised to see cancellations on the rise. They watched a similar pattern play out this summer when a brief travel rebound was cut short by a surge in cases and new travel restrictions.
  • The number of people passing through airport security checkpoints each day remains down by about 60% to 70% each day compared with last year.

Large Boeing 737 MAX customers signal caution on orders amid COVID-19 – Reuters, 11/19/20

  • A day after Boeing received approval for its 737 MAX to fly again following a 20-month grounding, its two largest U.S. and European customers signaled caution on their order books as they monitor demand in the midst of the coronavirus pandemic.
  • U.S. based Southwest Airlines, Boeing’s largest customer worldwide, said this week it would just take new MAX jets to replace jets it’s retiring rather than grow its fleet, and on Thursday raised the prospect of scaling back its fleet due to the pandemic.
  • A senior executive of Boeing’s largest European customer, low-cost carrier Ryanair, said on Thursday that it is not currently looking at additional orders for the jet, but may buy more if prices fall in the wake of COVID-19.
  • Norwegian Air Shuttle, another major MAX customer, this week sought bankruptcy protection in Ireland.

Airbus, Boeing expected to turn to hybrid engine technology for new planes-lessor – Reuters, 11/20/20

  • Airbus and Boeing are expected to turn to hybrid electric technology when they develop the next generation of airplanes because of limits on improving current engines, the head of a major aircraft lessor said on Thursday.
  • Airbus is already working hard on a hybrid solution but Boeing is likely to be more cautious about making a major investment in a new program given its challenges with the return of the 737 MAX and certification of the 777X, Air Lease Chief Executive Steven Udvar-Hazy said at the Skift Aviation Forum.
  • Udvar-Hazy said hybrid engines would allow for a lighter aircraft weight, as well as a technology transition rather than a step change.
  • Airbus said last year it was considering producing a hybrid plane by 2035 as it strives for a low-emission aircraft, while Rolls-Royce Holdings said in March it expected hybrid planes carrying around 100 people to be flying commercially by 2029.

GM Ups Bet on EVs as Investors Swoon for Electric Cars – Wall Street Journal, 11/19/20

  • General Motors is raising its bet on electric cars by more than a third, as it hustles to convince a skeptical Wall Street that it too can be successful in the nascent market.
  • The nation’s biggest auto maker by sales said Thursday it would spend $27 billion through 2025 to develop electric and driverless vehicles. That is up from a $20 billion figure that GM pegged in March, days before the Covid-19 pandemic forced the industry to shut its North American factories and touched off an industrywide cash crisis.
  • The auto maker projected Thursday that the cost of the battery pack for its plug-in vehicles in 2025 will be about 60% lower than the one used in its lone U.S. electric car today, the Chevrolet Bolt.
  • GM said 40% of the vehicles it will sell in the U.S. by mid-decade will be fully electric.
  • Early entries will be expensive—including a Hummer pickup truck that will be priced around $113,000 when it goes on sale late next year—but GM plans to add more-affordable models over time, including some that will sell in the low-$30,000 range, Mr. Parks said.

Mnuchin Declines to Extend Several Fed Emergency Lending Programs – Wall Street Journal, 11/19/20

  • Treasury Secretary Steven Mnuchin said he would allow several emergency Federal Reserve lending programs to expire, opening a divide with the central bank, which had pressed for an extension.
  • As a result, on Dec. 31 several novel Fed programs that have backed corporate credit and municipal-borrowing markets and that have provided loans to small and midsize businesses and nonprofits during the coronavirus pandemic will end.
  • In a letter to Fed Chairman Jerome Powell released to the public after markets closed Thursday, Mr. Mnuchin said the programs “have clearly achieved their objectives.”
  • Industry analysts have warned that Mr. Mnuchin’s decision would risk unsettling markets—which for various reasons have been volatile around the end of recent years—by weakening a key source of assurance that fueled investors’ optimism, especially as the economic recovery slows amid rising coronavirus cases.

US ECONOMY & POLITICS

JPMorgan becomes first major bank to say first quarter GDP will decline because of coronavirus surge – CNBC, 11/20/20

  • JP Morgan economists now see an economic contraction in the first quarter due to the spreading coronavirus and related restrictions being imposed by states and cities.
  • The new forecast is a departure from Wall Street’s widely held view that the first quarter would be positive, with an improving economy throughout 2021.
  • The economists expect the first quarter to contract by 1% after growth of 2.8% in the fourth quarter.
  • For the second quarter of 2021, they see the economy rallying and growth of 4.5% followed by a robust 6.5% in the third quarter.

Close Races to Determine Size of Democrats’ House Majority – Wall Street Journal, 11/20/20

  • More than two weeks after Election Day, a winner hasn’t been declared in a handful of close House races whose outcomes will determine how narrow a majority Democrats will wield next year after Republicans clawed back seats.
  • Democrats came into the election with 232 seats, compared with 197 Republicans and one Libertarian, while five seats were open.
  • Democrats clinched a majority last week after winning 218 contests.
  • Based on results so far and the outcomes of the remaining races, their new majority could be less than a dozen seats.
  • Counting was still going on in four nail-biter races Thursday, including two in California, one in New York and the one in Iowa.
  • Republican incumbents held leads in two other New York races, including one where the challenger had conceded, but hadn’t yet been declared the victors by the Associated Press.
  • And residents of northeastern Louisiana won’t know who will succeed GOP Rep. Ralph Abraham until after the Dec. 5 runoff between two GOP candidates.

Biden Wins Georgia, AP Projects – Wall Street Journal, 11/19/20

  • President-elect Joe Biden prevailed over President Trump in Georgia’s election, making him the first Democratic presidential candidate in 28 years to win the state, according to the Associated Press projection.
  • With the manual audit complete, Mr. Biden is one step closer to winning Georgia officially. Georgia Secretary of State Brad Raffensperger must still certify the results, which he is required to do by Friday.
  • Mr. Trump narrowed the margin over the past week, mostly as election workers in some Republican-leaning counties discovered ballots that hadn’t been tallied initially, election officials said.
  • Mr. Biden is leading by 12,284 votes, according to the audit results released Thursday. Mr. Biden’s victory in Georgia is the first for a Democratic presidential candidate since Bill Clinton narrowly defeated Republican President George H.W. Bush in 1992.

Trump Legal Team Claims Broad Conspiracy to Manipulate Election – Wall Street Journal, 11/19/20

  • President Trump’s legal team, facing setbacks in court and a rapidly closing window as states move toward certifying Joe Biden’s Electoral College victory, laid out sprawling and unsupported allegations of a conspiracy between Democratic officials and foreign governments to steal the presidential election.
  • The lawyers, led by Mr. Trump’s personal attorney Rudy Giuliani, detailed the campaign’s arguments Thursday at a roughly 90-minute news conference at the Republican National Committee headquarters and presented conspiracy theories that have gained traction among some Trump supporters in recent days.
  • They said they had affidavits that backed up allegations of election wrongdoing that the campaign has raised in its lawsuits before claiming widespread voter fraud and international collusion that goes well beyond what lawyers have asserted in court.
  • On Thursday, he invited two Republican legislative leaders from Michigan, where the campaign is trying to stop the state from certifying the vote, to a Friday afternoon meeting at the White House, according to a person familiar with the matter.
  • The legislators, Senate Majority Leader Mike Shirkey and House Speaker Lee Chatfield, plan to make the trip, the person said.
  • One of two Republicans on the four-member Michigan state canvassing board said Thursday night that he would consider voting not to certify the results of the Nov. 3 election next week if he sees credible evidence of irregularities or misconduct.

Biden Says He Has Picked Nominee to Lead Treasury Department – Wall Street Journal, 11/19/20

  • President-elect Joe Biden said Thursday he had chosen a nominee to lead the Treasury Department who he thinks will be accepted by both the liberal and moderate wings of the Democratic Party.
  • “You’ll soon hear my choice for Treasury, either just before or just after Thanksgiving,” Mr. Biden said at a news conference held in Wilmington, Del.
  • He has been considering a group of contenders with experience with the Federal Reserve, according to people familiar with the conversations, including Fed governor Lael Brainard, who was a Treasury undersecretary during the Obama administration; Roger Ferguson, a former Fed vice chairman; and Janet Yellen, a Fed chair under former President Barack Obama who departed in early 2018.

Most U.S. companies in China optimistic about Biden administration: business group – Reuters, 11/19/20

  • Over 60% of American businesses in China are more optimistic about doing business in China after the results of the United States presidential election, according to a business group survey released on Friday.
  • However, nearly one third of companies believed China-U.S. trade tensions will continue indefinitely, according to a survey of 124 companies by the American Chamber of Commerce in Shanghai, which also found that 33% of company heads are concerned for the personal safety of employees in China as a result of exit bans or detentions.
  • Most respondents to the survey, which was conducted on Nov. 11-15, did not expect trade restrictions or tariffs to increase. Companies also showed increased optimism on expected 2020 revenues compared to a July survey.

Fannie, Freddie Overseer Looks to End Federal Control Before Trump Leaves – Wall Street Journal, 11/20/20

  • The federal regulator who oversees Fannie Mae and Freddie Mac is pushing to speed up the mortgage giants’ exit from 12 years of government control but has yet to reach an agreement he needs with Treasury Secretary Steven Mnuchin, according to people familiar with the matter.
  • Mark Calabria, a libertarian economist who heads the Federal Housing Finance Agency, has made it a priority to return Fannie and Freddie to private hands, a goal shared by Mr. Mnuchin.
  • Completing the complex process before President Trump’s term ends on Jan. 20 is a long shot, and President-elect Joe Biden is considered unlikely to continue the effort.
  • But Messrs. Calabria and Mnuchin could succeed in taking steps that would be difficult to reverse, such as significantly restructuring the government’s stakes in the firms.

EUROPE & WORLD

With Covid-19 Pandemic Dragging On, Some Countries Say They Can’t Afford to Fight – Wall Street Journal, 11/20/20

  • As the sprint to try to reverse the spread of Covid-19 has turned into a marathon, some developing countries are dialing back spending on containing the pandemic.
  • From Pakistan to Peru, governments have cut back or ended food and cash handouts, and subsidies for phone, water and electricity bills that are aimed at encouraging people to stay home.
  • Uganda shut down most of its free quarantine centers, and stopped paying for funerals and providing free tests to anyone who asks for them. It is still subsidizing tests but expects citizens to foot part of the bill.
  • Many developing countries don’t have the savings or ability to borrow or tax to raise more money for a drawn-out campaign. Some are just hoping for a vaccine as a quick fix and conserving cash.

Factmonster – TODAY in HISTORY

  • New Jersey became the first state to ratify the Bill of Rights. (1789)
  • The war crimes trials of 24 German World War II leaders began in Nuremberg, Germany. (1945)
  • President John F. Kennedy agreed to lift the American blockade of Cuba, ending the Cuban missile crisis. (1962)

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