US FINANCIAL MARKET
Stocks Pull Back After S&P 500’s Tuesday Record – Wall Street Journal, 12/2/20
- U.S. stocks slipped Wednesday, pulling back from Tuesday’s record highs as rising coronavirus cases and a slowdown in private sector job creation weighed on investor sentiment.
- The U.K. government approved its Covid-19 vaccine for use, paving the way for the shot to be distributed within days.
- Shares of Pfizer’s and BioNTech rose.
- Meanwhile, Salesforce.com tumbled 9.9%.
- The cloud-computing company on Tuesday confirmed that it had agreed to buy Slack Technologies for $27.7 billion.
- The ADP National Employment Report on Wednesday showed that job creation in the private sector slowed last month.
- About 307,000 new nonfarm jobs were created, marking a drop from October and less than economists had been forecasting.
- U.S. lawmakers this week reignited talks for coronavirus relief packages, with House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin discussing measures by phone for the first time since the election.
- But investors remain skeptical about the prospects for fresh stimulus spending in the weeks before President-elect Joe Biden is sworn in.
- The Federal Reserve’s beige book report, due at 2 p.m. ET, will offer the latest collection of business anecdotes across Fed districts, offering insights into how companies view the economy’s prospects.
- Overseas, the Stoxx Europe 600 edged down 0.3%. Conflicting reports about the status of the talks between the European Union and the U.K. on a post-Brexit trade deal led to choppy trading in the region.
Coronavirus Live Updates: Reported U.S. Cases, Hospitalizations Continue to Surge – Wall Street Journal, 12/2/20
- The U.K. became the first Western nation to grant emergency-use authorization for a Covid-19 vaccine, clearing a shot developed by Pfizer and partner BioNTech to be distributed in limited numbers within days.
- While vaccines are within sight in the U.S., the country is facing a widespread surge that health experts warn will likely be compounded by Thanksgiving gatherings and holidays.
- Hospitalizations neared 100,000 Wednesday, and have set new records almost daily since Nov. 10, when the number of patients hospitalized for Covid-19 was 61,964, according to the Covid Tracking Project.
- New reported cases rose to 180,083, according to data compiled by Johns Hopkins University, and are expected to climb higher in coming days as a backlog of data from the Thanksgiving holiday weekend is reported.
- California recorded nearly 16,000 new infections, while Texas and Illinois each added more than 12,000 new cases.
- In New York City, which was an early hotspot but had appeared to bring transmission largely under control, the health commissioner advised older residents and people with underlying health conditions to avoid nonessential activities outside their homes as the number of Covid-19 hospitalizations in the city reached a level not seen since early June.
Salesforce Confirms Deal to Buy Slack for $27.7 Billion – Wall Street Journal, 12/1/20
- Salesforce.com agreed to buy messaging company Slack Technologies in a $27.7 billion deal that shows how the biggest players in cloud computing are racing to add muscle amid the pandemic’s remote-work boom.
- The cash-and-stock deal, announced Tuesday, is the biggest move yet by Salesforce Chief Executive Marc Benioff, a pioneer in selling subscriptions for software run on remote servers, to turn the company he co-founded 21 years ago into a broad-reaching powerhouse in tech tools for businesses.
- The deal is almost twice as large as Salesforce’s largest acquisition so far and would turn the combined company into a more formidable competitor to Microsoft and Google parent Alphabet.
- Also Tuesday, Salesforce posted earnings for the quarter ended Oct. 31. The company reported sales of $5.42 billion in the period, up from $4.51 billion the year prior, generating net income of $1.08 billion.
- Wall Street expected sales of $5.25 billion and net income of $700 million, according to FactSet.
- It lifted its full-year sales outlook to $21.10 billion to $21.11 billion. The high end of its earlier guidance was $20.8 billion.
- Sales next fiscal year should reach $25.45 billion to $25.55 billion, Salesforce said, including $600 million linked to Slack.
- Slack also reported its fiscal third quarter results Tuesday, a week earlier than anticipated, in conjunction with the deal.
- It posted sales of $234.5 million and a net loss of $68.4 million compared with sales of $168.7 million and a net loss of $89.2 million for the year-ago quarter.
- Analysts were estimating $224.8 million in sales and a net loss of $86.2 million for the quarter, according to FactSet.
Boeing 737 MAX returns to skies with media onboard – Reuters, 12/2/20
- Boeing’s 737 MAX is poised to make its first public appearance with media onboard since being grounded over fatal crashes, as one of its biggest customers, American Airlines, seeks to prove it is safe for passengers.
- Wednesday’s planned flight from Dallas, Texas, to Tulsa, Oklahoma, comes weeks before the first commercial passenger flight on Dec. 29, and is part of a concerted PR effort to restore the jet’s image following a 20-month ban.
- Wednesday’s flight marks the first time anyone besides regulators and industry personnel have flown on the MAX since the grounding, which rocked the aviation industry and ignited investigations focusing on software that overwhelmed pilots.
Ryanair close to new Boeing 737 MAX jetliner order: sources – Reuters, 12/2/20
- Ryanair is close to placing an order for dozens of additional Boeing 737 MAX jets in a commercial boost to the U.S. planemaker after regulators lifted a 20-month safety grounding, industry sources said.
- Europe’s largest low-fare carrier, which has an option to expand its current order by 75 jets to 210 aircraft, declined to comment.
- Boeing could not immediately be reached for comment.
- Ryanair has been negotiating for months to expand its order for 135 aircraft as part of discussions with Boeing over compensation for delays caused by the grounding, but no decision had been expected until the plane was cleared to resume flights.
- Each MAX is worth about $125 million at list prices but jets typically sell for closer to half their catalogue value and Ryanair is expected to win even steeper discounts for placing a key order amid cancellations by some buyers, the sources said.
Walmart axes $35 delivery minimum on website purchases for membership program – Reuters, 12/2/20
- Walmart said on Wednesday it would lift the $35 minimum order value that subscribers of its loyalty service had to meet for next-day or two-day shipping, as the retailer gears up for a holiday season dominated by online shopping.
- The change, starting Friday, only applies to items on the retailer’s website such as toys, appliances and clothing, the company said, adding that groceries, which are delivered from stores, will still have the $35 minimum.
- Walmart Plus, touted as a rival to Amazon.com’s Prime subscription service, was launched just over two months ago aiming to attract new customers and make existing ones more loyal as consumers consolidate their shopping to just a few retailers due to the COVID-19 pandemic.
US ECONOMY & POLITICS
U.S. private payrolls miss expectations as COVID-19 cases mount – Reuters, 12/2/20
- U.S. private payrolls increased less than expected in November, likely hampered by soaring new COVID-19 infections and business restrictions, adding to signs of slowing economic activity as a turbulent year winds down.
- Private payrolls rose by 307,000 jobs last month after increasing 404,000 in October.
- Economists polled by Reuters had forecast private payrolls would rise by 410,000 in November.
- The slowdown in hiring last month was across all industries.
- The ADP report was released ahead of the government’s closely watched, and comprehensive, monthly employment report on Friday.
- According to a Reuters survey of economists, private nonfarm payrolls likely increased by 587,000 jobs in November after rising 906,000 in October.
Coronavirus Stimulus Talks Restart as Centrists Unveil Bipartisan Plan – Wall Street Journal, 12/1/20
- Lawmakers released a blitz of competing coronavirus relief proposals Tuesday, reigniting stalled talks as the pandemic surges across the country, but without any clear signs that Democratic and Republican leaders would be able to reach a consensus.
- A bipartisan group from the House and Senate unveiled a roughly $900 billion compromise proposal, offering one route between House Democrats’ last $2.4 trillion bill and Senate Republicans’ recent $650 billion proposal.
- Meanwhile, GOP and Democratic leaders traded new offers, as the looming expiration of some relief measures intensified the pace of year-end legislating.
- In an indication that GOP leaders weren’t yet ready to make major concessions, Senate Majority Leader Mitch McConnell (R., Ky.) circulated a new plan to his caucus that he said reflected what President Trump would be willing to sign into law in the waning days of his administration, after speaking with White House officials.
- The new Republican offer, similar to the recent Senate GOP bill, includes more funding for small businesses, legal protections for entities operating during the pandemic and a one-month extension of expanded unemployment insurance programs that expire at the end of December.
- It doesn’t include additional funding for state and local governments, a priority of Democrats.
- There was no official price tag for the new GOP offer.
Trump Threatens to Veto Defense Bill if Tech Liability Shield Stands – Wall Street Journal, 12/1/20
- President Trump threatened to veto an annual defense-policy bill if it doesn’t include language revoking a provision that gives social-media companies broad immunity for the content they publish from users on their sites.
- Mr. Trump demanded on Tuesday night that Section 230 of the 1996 Communications Decency Act be repealed.
- Section 230 has given online companies broad immunity from legal liability for their users’ actions and wide latitude to police content on their sites.
- The president had previously threatened to veto the same defense bill, which includes a 3% pay raise for U.S. troops, over his opposition to language that would rename military bases honoring Confederate commanders.
- The legislation would authorize a total of $740 billion in fiscal year 2021 for the Defense Department’s and Energy Department’s national-security programs.
Biden says will not kill Phase 1 trade deal with China immediately: NYT – Reuters, 12/1/20
- Joe Biden will not immediately cancel the Phase 1 trade agreement that President Donald Trump struck with China nor take steps to remove tariffs on Chinese exports, the New York Times on Wednesday quoted the U.S. president-elect as saying.
- “I’m not going to make any immediate moves, and the same applies to the tariffs. I’m not going to prejudice my options,” President-elect Biden told Friedman.
- Biden said he would pursue policies targeting China’s “abusive practices,” such as “stealing intellectual property, dumping products, illegal subsidies to corporations” and forcing “tech transfers” from U.S. companies to Chinese counterparts.
- Under the Phase 1 agreement signed this year, China agreed to increase purchases of American products and services by at least $200 billion over 2020 and 2021.
- The deal also left in place 25% tariffs on a $250-billion array of Chinese industrial goods and components used by U.S. manufacturers, and China’s retaliatory levies on more than $100 billion in U.S. goods.
U.S. House seen approving bill blocking Chinese firms from U.S. markets – Reuters, 12/1/20
- The U.S. House of Representatives is expected to pass legislation this week that could prevent some Chinese companies from listing their shares on U.S. exchanges unless they adhere to U.S. auditing standards, congressional aides said.
- The bill would give Chinese companies such as Alibaba, tech firm Pinduoduo Inc. and oil giant PetroChina Co Ltd. three years to comply with U.S. rules before being removed from U.S. markets.
- The House is scheduled to vote on Wednesday evening on “The Holding Foreign Companies Accountable Act,” which bars securities of foreign companies from being listed on any U.S. exchange if they have failed to comply with the U.S. Public Accounting Oversight Board’s audits for three years in a row.
- Aides said there is bipartisan backing for the measure. Measures taking a harder line on Chinese business and trade practices generally pass Congress with large margins.
EUROPE & WORLD
Exclusive: China’s Ant considers Paytm stake sale amid tensions with India – sources – Reuters, 12/2/20
- Chinese fintech giant Ant Group is considering selling its 30% stake in Indian digital payment processor Paytm amid tensions between the two Asian neighbors and a toughening competitive landscape, people with direct knowledge of the matter said.
- Financial details of the possible transaction have not been firmed up and Ant, the Alibaba-backed payments-to-consumer credit behemoth, has not launched a formal sale process yet, four people told Reuters.
- Both Ant and Paytm said that the information was incorrect. A Paytm spokesman said “there has been no discussion with any of our major shareholders ever, nor any plans, about selling their stake.”
- Ant’s possible exit from Paytm would mark another reversal for the Chinese company hot on the heels of the dramatic suspension of its $37 billion stock listing last month, which would have been the world’s largest.
Hyundai Motor to launch dedicated EV platform in major push into electric cars – Reuters, 12/2/20
- South Korea’s Hyundai Motor Group said on Wednesday it will introduce an electric vehicle-only platform early next year that will use its own battery technology to cut production time and costs.
- Hyundai expects its dedicated Electric Global Modular Platform (E-GMP) will allow it to use its own battery module technology across various EV models and cut the number of components by 60%.
- An electric vehicle based on E-GMP will offer a driving range of 500 kms (310 miles) or more on a single charge, an improvement of at least 23% from the Kona EV, the longest driving range model among Hyundai’s EV lineups.
- However, Hyundai’s R&D chief Albert Biermann said the company doesn’t see the need to make its own battery cells and is content with cooperating with its suppliers including SK Innovation Co Ltd and LG Chem’s LG Energy Solution.
Exclusive: EU antitrust regulators to clear $27 billion LSE, Refinitiv deal – sources – Reuters, 12/2/20
- The London Stock Exchange is set to win EU antitrust approval for its $27 billion (20.2 billion pounds) acquisition of data analytics company Refinitiv, two people familiar with the matter said on Wednesday.
- The deal would make the LSE a major distributor and creator of market data. Last month it offered to allow rivals non-discriminatory access to clearing and data for 10 years as part of a package of concessions which included the sale of its Borsa Italiana operations to Euronext.
- The sources declined to provide details of any changes to the concessions.
Iran watchdog passes law on hardening nuclear stance, halting U.N. inspections – Reuters, 12/2/20
- Iran’s watchdog body approved a law on Wednesday that obliges the government to halt U.N. inspections of its nuclear sites and step up uranium enrichment beyond the limit set under Tehran’s 2015 nuclear deal if sanctions are not eased in a month.
- In retaliation for the killing last week of Iran’s top nuclear scientist, which Tehran has blamed on Israel, Iran’s hardline-dominated parliament on Tuesday approved the bill with a strong majority that will harden Iran’s nuclear stance.
- Under the new law, Tehran gives one month to the deal’s European parties to ease sanctions on Iran’s oil and financial sectors, imposed after Washington quit the pact between Tehran and six powers in 2018.
- The law pushed by hardline lawmakers would make it harder for U.S. President-elect Joe Biden, who will take office on Jan. 20, to rejoin the agreement.
- Napoleon Bonaparte was crowned emperor of France in Paris by Pope Pius VII. (1804)
- President James Monroe outlined his famous doctrine opposing European expansion in the Western Hemisphere. (1823)
- The Senate voted to condemn Republican senator Joseph R. McCarthy of Wisconsin for “conduct that tends to bring the Senate into dishonor and disrepute.” (1954)
- Enron Corp., under CEO Kenneth Lay, filed for bankruptcy. (2001)