Daily Market Report | Dec. 04, 2020

US FINANCIAL MARKET

U.S. Stocks Climb as Investors Bet on Stimulus – Wall Street Journal, 12/4/20

  • U.S. stocks rose Friday as investors hoped new data showing a slowdown in the labor market’s recovery would fuel prospects for additional fiscal stimulus.
  • Investors this week have closely followed the revival of negotiations in Washington over a new coronavirus aid package.
  • They are also monitoring data on Covid-19 infections and deaths, as well as reports about progress toward vaccine approval and distribution.
  • Figures released Friday by the Bureau of Labor Statistics showed that employers added 245,000 jobs last month, down from the 638,000 jobs added in October and below economists’ expectations. The unemployment rate declined to 6.7% from 6.9% in October.
  • Newly reported Covid-19 cases in the U.S. hit a record high Thursday, as did deaths reported in a day, as the global death toll from the coronavirus pandemic passed 1.5 million.
  • Hospitalizations also hit a record, with 100,667 people in the U.S. admitted as of Thursday, according to the Covid Tracking Project.
  • Investors are increasingly optimistic about momentum for a roughly $900 billion compromise Covid-19 relief plan to be pushed through Congress before the Christmas holiday, though differences remain over parts of the proposal.
  • In bond markets, the yield on the 10-year U.S. Treasury note ticked up to 0.969%, from 0.919% on Thursday.

Coronavirus Live Updates: U.S. Infections, Deaths, Hospitalizations All Hit Record Highs – Wall Street Journal, 12/4/20

  • Newly reported Covid-19 cases in the U.S. hit a record high, as did deaths reported in a day, as the global death toll from the coronavirus pandemic passed 1.5 million.
  • Hospitalizations also hit a record, with 100,667 people in the U.S. admitted as of Thursday, according to the Covid Tracking Project. Of those, a record 19,442 people were in intensive care.
  • The country reported 217,664 new cases on Thursday, according to data compiled by Johns Hopkins University, up from 200,055 on Wednesday, and surpassing the previous record of 205,557 set Friday last week.
  • Newly reported deaths also surged Thursday, to 2,879, according to Johns Hopkins data, the second daily record in a row.
  • The U.S. reported 2,804 deaths on Wednesday.
  • California, which leads the U.S. in total cases, set another record for newly reported cases in a day on Thursday, with 21,368, according to Johns Hopkins data.
  • Gov. Gavin Newsom has said the state would issue new stay-at-home orders in regions where hospital intensive-care unit availability drops below 15%.
  • Illinois and Texas led the nation in new fatalities, reporting more than 200 deaths each on Thursday, just as they did Wednesday, Johns Hopkins data show.
  • A number of other states—including Colorado, Iowa and Nevada—all recorded their highest number of daily deaths since the pandemic began.
  • The seven-day average of new deaths in the U.S. nearly doubled to 1,603 on Wednesday from 828 on Nov. 1, reaching its highest level since May 11, according to a Wall Street Journal analysis of data from Johns Hopkins.

California governor issues regional lockdown plans as ICUs near capacity – Reuters, 12/3/20

  • California’s governor on Thursday announced plans to impose COVID-19 stay-at-home orders on a regional basis, with tougher social and economic restrictions to be triggered when intensive care units near maximum capacity at a region’s hospitals.
  • The latest constraints, unveiled as infections and hospitalizations soared further, will take effect after 48 hours in any of five designated geographic regions where available ICU space falls to 15% of capacity or less, Governor Gavin Newsom said.
  • Newsom said he expects all portions of the state outside the San Francisco Bay Area to reach their respective 15% thresholds this week. The Bay area is expected to follow by mid- to late-December.
  • Each region is to remain under its stay-at-home order for at least three weeks once they are imposed.
  • The latest order will direct residents to remain at home and avoid travel except as necessary for permitted activities, such as grocery shopping, medical appointments, dog walks and individual outdoor exercise.
  • Restaurants will be limited to takeout and pickup service, while bars, breweries and distilleries will be shuttered, along with fitness centers, hair salons, barber shops, casinos and nail parlors.
  • Retail establishments may remain in business while limited to 20% of capacity, with hotels permitted to stay open to support “critical infrastructure” only.
  • Office workplaces will be closed except for essential sectors where remote working is impossible.
  • Public schools with in-classroom instruction already in place may remain open.

Pfizer Slashed Its Original Covid-19 Vaccine Rollout Target After Supply-Chain Obstacles – Wall Street Journal, 12/4/20

  • When Pfizer said last month it expects to ship half the Covid-19 vaccines it had originally planned for this year, the decision highlighted the challenges drug makers face in rapidly building supply chains to meet the high demand.
  • Pfizer and Germany-based partner BioNTech had hoped to roll out 100 million vaccines world-wide by the end of this year, a plan that has now been reduced to 50 million.
  • Pfizer had its 100-million dose goal in place until mid-November, when it became clear the supply-chain hurdles were too great for the end-of-the-year timeline.

American Airlines sees fourth-quarter cash burn at high end of guidance – Reuters, 12/4/20

  • American Airlines said on Friday it expects its fourth-quarter average daily cash burn to be at the high end of its previously forecasted range of between $25 million and $30 million.
  • The U.S. airline industry is still losing billions of dollars every month as travel demand remains weak and recent coronavirus travel advisories have discouraged holiday travel.
  • The U.S. airline now expects to end the fourth quarter with about $14 billion in total available liquidity.
  • Delta Air Lines warned on Thursday it would lose about $2 million more than forecast each day in the fourth quarter, but kept a target to halt its cash burn next spring.

Boeing again cutting widebody production rate – Reuters, 12/4/20

  • Boeing is reducing its 787 widebody production to five jets monthly in mid-2021 from six, and delivered zero 787s to customers in November, as longer-haul travel demand remains weakened by the coronavirus pandemic, the U.S. planemaker’s Chief Financial Officer said on Friday.
  • Boeing’s Greg Smith also told a conference that there is no “normal profile” currently for jet pre-delivery payments or PDPs, which are tied to production rates. Boeing has been forced to cut production due to the 20-month grounding of its cash cow 737 MAX after fatal crashes and the pandemic downturn.
  • “I think we’ve got a couple years here where PDPs will be a little bumpy,” Smith said.

Investors Circle Largest Corporate Cash Hoard Ever – Wall Street Journal, 12/4/20

  • U.S. companies are sitting on the largest pile of cash ever. Investors are trying to gauge how they are going to use it.
  • Cash holdings at nonfinancial companies grew to a record $2.1 trillion at the end of June, according to a recent report from Moody’s Investors Service.
  • That is up 30% from that time last year and higher than the previous peak of nearly $2 trillion in 2017.
  • As of Nov. 30, companies had sold more than $2 trillion of investment-grade and high-yield bonds—the most on record in data going back to 2006—according to LCD, a unit of S&P Global Market Intelligence.

Warner Bros. to Release All 2021 Films on HBO Max and in Theaters Simultaneously – Wall Street Journal, 12/3/20

  • Warner Bros., the Hollywood studio founded as a Pennsylvania nickelodeon in 1903 and responsible for classics like “Casablanca,” signaled Thursday that the entertainment industry’s future isn’t in the theater, but in the living room.
  • The AT&T -owned studio said it would release its entire 2021 slate of theatrical films simultaneously in theaters and on its HBO Max streaming service, the most drastic step yet taken by a major studio as the coronavirus pandemic continued to move Hollywood’s focus away from movie theaters and toward in-house streaming services.
  • The strategy covers all 17 movies scheduled for release by the studio next year, including big-budget films such as the science-fiction adaptation “Dune” and a new installment in the “Matrix” franchise.
  • HBO Max will host the movies for only their first month of theatrical release before the films follow their usual distribution pattern.
  • Warner Bros. executives emphasized that the changes announced Thursday only applied to 2021 films.
  • Outside the U.S., the films will be released exclusively in movie theaters and later move to streaming.

More than 400 lawmakers from 34 countries back ‘Make Amazon Pay’ campaign – Reuters, 12/4/20

  • More than 400 lawmakers from 34 countries have signed a letter to Amazon.com boss Jeff Bezos backing a campaign that claims the tech giant has “dodged and dismissed … debts to workers, societies, and the planet,” organizers said.
  • The “Make Amazon Pay” campaign was launched on Nov. 27 – the annual Black Friday shopping bonanza – by a coalition of over 50 organizations, with demands including improvements to working conditions and full tax transparency.
  • The letter’s signatories include U.S. Congresswomen Ilhan Omar and Rashida Tlaib, former UK Labour Party leader Jeremy Corbyn and Vice President of the European Parliament Heidi Hautala, co-convenors Progressive International and UNI Global Union said.
  • Amazon, the world’s biggest retailer, has faced criticism for its tax practices before, including in the UK and the EU.
  • It says its profits remain low given retail is a highly competitive, low margin business and it invests heavily.

US ECONOMY & POLITICS

U.S. job growth slows sharply; long-term unemployment rises – Reuters, 12/4/20

  • The U.S. economy added the fewest workers in six months in November, hindered by a resurgence in new COVID-19 cases that, together with a lack of more government relief money, threatens to reverse the recovery from the pandemic recession.
  • Nonfarm payrolls increased by 245,000 jobs last month after rising by 610,000 in October, the Labor Department said on Friday.
  • The fifth straight monthly slowdown in job gains left employment 9.8 million below its February peak.
  • The unemployment rate fell to 6.7% from 6.9% in October.
  • The number of people unemployed for 27 weeks or more jumped 385,000 in November to 3.9 million.
  • These long-term unemployed accounted for 36.9% of the 10.7 million unemployed last month.
  • The number of people working part-time for economic reasons was steady at 6.7 million.
  • Despite the ample slack in the labor market, average hourly earnings rose 0.3% after nudging up 0.1% in October.
  • That left the year-on-year increase in wages at 4.4%.
  • The average workweek was steady at 34.8 hours.

U.S. factory orders increase more than expected in October – Reuters, 12/4/20

  • New orders for U.S.-made goods increased more than expected in October and business investment on capital was a bit stronger than initially thought as the manufacturing sector continues its steady recovery from the pandemic.
  • The Commerce Department said on Friday that factory orders rose 1.0% after increasing 1.3% in October.
  • Economists polled by Reuters had forecast factory orders increasing 0.8% in October.
  • The Commerce Department also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, increased 0.8% in October instead of 0.7% as reported last month.
  • Shipments of core capital goods, which are used to calculate business equipment spending in the GDP report, accelerated 2.4%.
  • They were previously reported to have jumped 2.3%.

Coronavirus Stimulus Talks Moving in Right Direction, Party Leaders Say – Wall Street Journal, 12/3/20

  • Lawmakers dived into negotiations Thursday over the two thorniest components of a new coronavirus aid package as momentum grew for a roughly $900 billion compromise proposal designed to break the congressional stalemate in time for the Christmas holiday.
  • Earlier this week, a bipartisan group from the House and Senate had reached broad consensus around a new $908 billion aid package that included funding for state and local governments and legal protections for businesses and other entities operating during the pandemic.
  • “The number is not the problem,” said Sen. Lindsey Graham (R., S.C.). “It’s policy differences.”
  • Differences over liability protections for business, health-care providers and schools have proved difficult to bridge.
  • Shielding companies and nonprofit organizations from lawsuits stemming from coronavirus exposures has been a central goal of Mr. McConnell throughout much of 2020.
  • Democrats have long opposed the idea of extending additional legal protections to employers, instead pushing for legislation that would bolster safety standards for workers during the pandemic.
  • The bipartisan proposal now at the center of the negotiations calls for offering a short-term liability shield, but lawmakers are still crafting specifics, according to aides. Some Republican senators on Thursday said they had seen a version of the proposal that would offer legal protections for six months.
  • The bipartisan proposal included $160 billion for state and local governments, which some Republicans said might be too high.
  • “If the figure’s over $150 [billion], I won’t like it,” said Sen. Chuck Grassley (R., Iowa), who indicated he was open to the overall proposal.

U.S. Trade Deficit Widened in October as Exports, Imports Rose – Wall Street Journal, 12/3/20

  • The U.S. trade deficit widened in October as exports and imports rose for a fifth straight month, reflecting a continued recovery in global commerce from the impact of the coronavirus pandemic.
  • The U.S. posted a deficit of $63.1 billion in October, compared with $62.1 billion in September, the Commerce Department said Friday. The figures were adjusted for seasonal variations.
  • Exports rose 2.2% to $182.0 billion from the previous month, while imports increased 2.1% to $245.1 billion.

United States adds China’s SMIC and CNOOC to Defense blacklist – Reuters, 12/4/20

  • The Trump administration on Thursday added China’s top chipmaker, SMIC, and oil giant CNOOC to a blacklist of alleged Chinese military companies, drawing condemnation from Beijing as President-elect Joe Biden prepares to take office.
  • The Department of Defense designated a total of four additional companies as owned or controlled by the Chinese military, including China Construction Technology Co Ltd and China International Engineering Consulting Corp.
  • The move, first reported by Reuters on Sunday, takes to 35 the total number of blacklisted companies.
  • While the list did not initially trigger any penalties, a recent executive order by Republican President Donald Trump will prevent U.S. investors from buying the firms’ securities from late next year.
  • The expanded blacklist is seen as part of a bid to cement Trump’s tough-on-China legacy and to box Biden, the Democratic president-elect who takes office on Jan. 20, into hardline positions on Beijing amid bipartisan anti-China sentiment in Congress.

EUROPE & WORLD

Iran pressures Biden with plan to increase underground enrichment machines – Reuters, 12/4/20

  • Iran is raising pressure on U.S. President-elect Joe Biden with plans to install more advanced uranium-enriching centrifuges at an underground plant in breach of its deal with major powers, a U.N. nuclear watchdog report showed on Friday.
  • The confidential International Atomic Energy Agency report obtained by Reuters said Iran plans to install several more cascades, or clusters, of advanced IR-2m centrifuges in the underground plant at Natanz, which was apparently built to withstand aerial bombardment.
  • Iran’s nuclear deal with major powers says Tehran can only use first-generation IR-1 centrifuges, which are less efficient, at the underground plant and that those are the only machines with which Iran may accumulate enriched uranium. Iran recently moved one cascade of IR-2m machines underground at Natanz.

Factmonster – TODAY in HISTORY

  • George Washington delivered his farewell address to his officers at Fraunces Tavern in New York City. (1783)
  • James Monroe of Virginia was elected (by electors) the fifth president of the United States. (1783)
  • The Senate approved U.S. participation in the United Nations. (1945)
  • Dianne Feinstein became San Francisco’s first female mayor. (1978)

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