Daily Market Report | December 7, 2021
US FINANCIAL MARKET
Stock Futures, Oil Gain on Omicron Optimism – Wall Street Journal, 12/7/2021
- The U.S. stock market started another day of strong gains, as the S&P 500 and oil prices rose on hopes that Omicron would prove less damaging to the economy than feared..
- Vir Biotechnology’s shares gained more than 5% in premarket trading after the immunology company and its partner, GlaxoSmithKline, said their Covid-19 antibody treatment proved effective against the Omicron variant in laboratory studies.
- Shares of Intel gained 8% premarket after The Wall Street Journal reported that it was planning to publicly list shares in its Mobileye self-driving-car unit, the latest move by Chief Executive Pat Gelsinger to revive the semiconductor giant’s fortunes.
- The People’s Bank of China said it would reduce the reserve requirement ratio for banks by 0.5 percentage point to 8.4%, starting Dec. 15.
- This would unleash about 1.2 trillion yuan, equivalent to around $188 billion, into the financial system.
- Hong Kong’s broader Hang Seng Index gained 2.7%, while China’s Shanghai Composite edged up 0.2%.
- Japan’s Nikkei 225 rallied 1.9% and South Korea’s Kospi added 0.6%.
- In Europe, the pan-continental Stoxx Europe 600 surged 2%.
- Brent crude futures, the benchmark in global oil markets, rose 2.3% to $74.79 a barrel, as fears of renewed Covid-related lockdowns recede.
- In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 1.448% Tuesday from 1.433% Monday.
MongoDB shares jump as revenue growth accelerates – CNBC, 12/7/2021
- MongoDB’s revenue shows $226.9 million, vs. $205.2 million as expected by analysts, according to Refinitiv.
- Revenue grew 50% year over year in the quarter that ended Oct. 31, compared with 44% growth in the prior quarter, according to a statement.
- The company reported a loss of 11 cents per share, adjusted, vs. a loss of 38 cents per share as expected by analysts, according to Refinitiv.
- Revenue from the company’s Atlas cloud database service grew 84%, compared with 83% growth in the previous quarter.
- But the company’s total net loss widened to $81.3 million from $72.7 million in the year-ago quarter, with sales and marketing expenses totaling more than half of quarterly revenue.
- MongoDB raised its guidance for the full 2022 fiscal year.
- It now expects an adjusted net loss per share of 74 cents to 71 cents on $846.3 million to $849.3 million in revenue, compared with a loss of $1.20 to $1.13 on $805.0 million to $811.0 million in revenue.
AutoZone Posts Higher 1Q Earnings, Sales Ahead of Analysts’ Views – MarketWatch, 12/7/2021
- The auto parts retailer and distributor said earnings were $555.2 million for the quarter ended Nov. 20, compared with $442.4 million a year earlier.
- Per-share profit was $25.69, compared with $18.61 a year ago. Analysts surveyed by FactSet were expecting $20.98 a share.
- AutoZone’s net sales were $3.67 billion, up from $3.15 billion a year earlier and ahead of analysts’ expectations of $3.37 billion in sales.
- The company said inventory increased 3% over last year’s first quarter driven by new stores.
- The company opened 15 new stores in the U.S., two stores in Mexico and one store in Brazil.
- The company had a total of 6,785 across the three countries.
Instagram Unveils Tools to Keep Teens Safe, Including Parental Controls – Wall Street Journal, 12/7/2021
- Among the measures, the popular photo-sharing service will be implementing tools to help users take breaks, or view new topics if they’ve been dwelling on one thing for too long, said Instagram head Adam Mosseri in a blog post.
- The platform, owned by Meta Platforms formerly known as Facebook, will also block users from tagging or mentioning teens who don’t follow them.
- And in January, it will allow all users to bulk-delete their own content, including photos, videos, likes and comments.
- The rollout comes the day before Mr. Mosseri is slated to testify before Congress for the first time.
- The Take a Break feature, which alerts users when they’ve been on Instagram for a predetermined amount of time, became available Tuesday in the U.S., U.K., Australia, Canada, Ireland and New Zealand.
- It is available to all users but was designed with teens in mind.
- Instagram’s parental controls, designed to let parents monitor how long their kids use the app and set time limits, would also be opt-in when available this March.
Intel to List Shares in Mobileye Unit – Wall Street Journal, 12/7/2021
- Intel is planning to publicly list shares in its Mobileye self-driving-car unit, the latest move by Chief Executive Pat Gelsinger to revive the semiconductor giant’s fortunes.
- Intel said it would take the unit public in the U.S. in mid-2022 through an initial public offering of new Mobileye stock.
- The move, earlier reported by The Wall Street Journal, could value Mobileye at north of $50 billion.
- Mobileye, an Israeli company Intel acquired in 2017 for around $15 billion, specializes in chip-based camera systems that power automated driving features in cars. It originally went public in 2014.
- Mobileye’s revenues have roughly tripled since Intel bought it.
- It had $326 million of revenue in the third quarter, a 39% year-over-year increase.
- By relisting shares of Mobileye, Intel could tap into surging investor demand for companies betting on the future of transportation.
American Airlines CEO Doug Parker to Step Down – Wall Street Journal, 12/7/2021
- American Airlines’ Chief Executive Doug Parker will step down next year after two decades running airlines, handing the reins to a longtime lieutenant as the company begins to emerge from the pandemic.
- Robert Isom, who has served as American’s president since 2016, will take over as CEO on March 31, 2022, the company said Tuesday.
- Mr. Parker will continue to serve as chairman of American’s board.
- American isn’t the only major U.S. airline going through a transition. Gary Kelly, Southwest Airlines’ longtime CEO, is also set to retire early next year.
- United Airlines’ Chief Executive Scott Kirby took the reins of that airline in May 2020, following the retirement of Oscar Munoz.
Constellation Brands Agrees to Build Large Brewery in Southeastern Mexico – Wall Street Journal, 12/7/2021
- Constellation Brand, the brewer of Corona beer for U.S. consumers, has agreed to build a brewery in southeastern Mexico, according to Mexican officials, almost two years after the nationalist government ordered the closure of a nearly completed $1.4 billion plant near the U.S.-Mexico border.
- The company and Mexican President Andrés Manuel López Obrador are expected to announce the construction of the new brewery as early as this week, with an investment of about $1.3 billion, said a person familiar with the plans.
- The exact location of the new plant hasn’t been made public, but Economy Minister Tatiana Clouthier told Mexican lawmakers recently that the company was planning an important investment in the Gulf state of Veracruz, where it would be able to access ample water supplies.
- The brewery deal is also critical for Constellation, which has annual sales of more than $8.5 billion.
- It depends for growth on its coveted Mexican beer portfolio for the U.S. market, which also includes brands such as Modelo, Victoria and Pacífico.
ViacomCBS teams up with ‘Parasite’ distributor to make Paramount+ Asia debut – Reuters, 12/7/2021
- ViacomCBS and Seoul-based CJ ENM, the distributor of Oscar winning movie “Parasite”, have signed a content partnership agreement, the companies said on Tuesday, marking the Asia debut for the U.S. company’s Paramount+ streaming service.
- As part of the deal, ViacomCBS will launch its Paramount+ streaming service in South Korea in 2022 as an exclusive bundle with TVING, CJ ENM’s streaming service.
- As the U.S. streaming market saturates, industry leaders are looking outside the United States for growth.
- South Korea, Asia’s fourth-largest economy, has established itself as a global entertainment hub with its vibrant pop-culture, including the seven-member boy band BTS and movies such as Oscar winners “Parasite,” and “Minari.”
Treasuries Battered Before Auction That Went Poorly Last Month – Bloomberg, 12/7/2021
- Short-maturity Treasury yields climbed steeply in U.S. trading Tuesday ahead of the week’s first coupon auction — a three-year note sale that has traders on edge after last month’s produced some of the weakest demand metrics since the dislocations of early 2020, and an ensuing selloff.
- As two- to five-year yields climbed by at least four basis points, the three-year note’s rose as much as 5.2 basis points to 0.956%, within three basis points of its 2021 high reached Nov. 24.
- A new three-year note is to be sold at 1 p.m. New York time in a $54 billion auction, the first since the Federal Reserve’s hawkish policy pivot last week.
- Similar to Monday, when yields across the curve increased by 4 to 10 basis points, the move was accompanied by rising U.S. equity benchmarks and a heavy slate of new corporate bonds.
- The added element is that last month’s three-year auction drew a yield that was a basis point higher than dealers expected, making it the worst by that metric since the dislocations of March and April 2020.
US ECONOMY & POLITICS
U.S. Trade Gap Shrinks for First Time Since July on Export Surge – Bloomberg, 12/7/2021
- The U.S. trade deficit narrowed in October for the first time since July, reflecting a sharp increase in exports and suggesting that foreign demand for goods is on the rise.
- The gap in trade of goods and services shrank 17% to $67.1 billion, from a revised $81.4 billion in September, according to Commerce Department data released Tuesday.
- The median estimate in a Bloomberg survey of economists was for a shortfall of $66.8 billion.
- The value of goods and services exported rose 8.1% to $223.6 billion in October, the highest on record.
- Imports meanwhile, climbed 0.9% to $290.7 billion — also a record — led by shipments of automotive-vehicle parts and engines.
- The value of goods exports surged the most since July 2020 to a record $158.7 billion.
- The merchandise-trade deficit, which strips out services spending, fell to $83.9 billion, the smallest since October 2020.
- The nation’s surplus in services trade increased for a second straight month to $16.8 billion.
- Travel imports, a measure of Americans traveling abroad, rose for an eighth month to a pandemic high of $6.38 billion.
- Travel exports — or spending by visitors to the U.S. — climbed for a second month, reaching $5.83 billion after the Biden administration lifted travel restrictions on Nov. 8.
- On an inflation-adjusted basis, the October merchandise-trade deficit narrowed to $97.6 billion, the smallest this year.
Biden to Warn Putin Off Invasion of Ukraine – Wall Street Journal, 12/6/2021
- President Biden spoke Monday with European allies ahead of a call with Vladimir Putin in which he will warn the Russian president not to invade Ukraine, officials said.
- Fears of a Russian invasion of Ukraine grew last week, with U.S. officials citing new intelligence reports about a troop buildup on the border.
- The expected total force of 175,000 troops would be roughly twice the size of a buildup in the spring, officials said.
- The U.S. has discussed with European partners about imposing sanctions, should Russia launch an invasion, the official said.
- On Monday, Kremlin spokesman Dmitry Peskov told Russia’s Channel One state television channel that Mr. Putin was ready to listen to Mr. Biden’s proposals on settling the situation in Ukraine, but cautioned against excessive expectations.
Justice Department Sues Texas Over Election Map – Wall Street Journal, 12/6/2021
- The Biden administration on Monday sued Texas for a second time over its election practices, alleging Republican state lawmakers discriminated against Latinos and other minorities by approving new congressional and state legislative districts that officials said would dilute minority voting power.
- The action represents the Justice Department’s first major challenge to redistricting, as states are undertaking the once-a-decade process of redrawing their legislative districts.
- Texas’ plans have also been challenged in court by advocacy groups that say lawmakers ignored a legal obligation to create new, minority-rich districts to account for the state’s increased diversity, particularly around the fast-growing cities of Dallas and Houston.
- Monday’s action by the Justice Department comes roughly a month after it sued the state over aspects of a separate, new voting law that officials said will disenfranchise eligible voters, including those with limited English proficiency, older people, those with disabilities, deployed members of the military and Americans living outside the U.S.
EUROPE & WORLD
Visa-Backed Fintech in Brazil Buys Mexican Card Processor Cacao – Bloomberg, 12/7/2021
- Dock, a Brazilian fintech backed by Visa, said it acquired Cacao Paycard Solutions SA de CV, a Mexico City-based card-processing solutions company.
- Dock, which provides infrastructure for Latin American financial-technology companies, didn’t disclose the price of the transaction.
- The Sao Paulo-based company, which powers more than 40.9 million active accounts through its cloud-based platform, gains 50 Cacao clients through the takeover, including Mexican fintech Albo and unicorn payment firm Clip.
- The potential market for digital-banking infrastructure in the nation is $2.9 billion and is expected to grow 34% in the next 5 years, according to Americas Market Intelligence.
- Dock, which plans to use its own brand in Mexico, processes roughly $50 billion in payment volume across Latin America annually.
- Riverwood Capital and Visa were early investors in Dock, which received $170 million last year from firms including Singapore-based Temasek, Viking Global Investors and Advent International affiliate Sunley House Capital.
Europe Tops China in Spawning $1 Billion Tech Startups – Wall Street Journal, 12/7/2021
- Europe has overtaken China in creating billion-dollar tech startups, according to a new analysis that points to Europe’s rising status in the field and the effect of Beijing’s crackdown on capitalist entrepreneurialism.
- While China still has far more large tech companies than Europe, and a larger internal market for them, trends have shifted over the past year according to research by Atomico, a London-based venture-capital firm that produces an annual analysis, the State of European Tech.
- This year, China has added 26 tech companies with valuations above $1 billion, known as unicorns, bringing its total to 300, according to Atomico and data from analysts Dealroom.co.
- Europe has 98 new unicorns this year, bringing its total to 321, according to Atomico.
- In the first nine months of 2021, China drew $45 billion in venture funding compared with $52 billion for all of 2020, while Europe has already surpassed last year’s total, Atomico said.
- Through September, venture capital funds invested $77 billion in Europe, up from $48 billion for the whole of last year.
- European startups also generally carry lower valuations than their U.S. counterparts, attracting deal-hungry American investors.
Israel announces completion of underground Gaza border barrier – Reuters, 12/7/2021
- Israel on Tuesday announced the completion of a sensor-equipped underground wall on its side of the Gaza border, a counter-measure developed after Hamas militants used tunnels to blindside its troops in a 2014 war.
- Israel went public with the project, which also includes an above-ground fence, a naval barrier, radar systems and command and control rooms, in 2016.
- The ministry said the barrier, which includes hundreds of cameras, radars and other sensors, spans 65 kilometers (40 miles) and that 140,000 tons of iron and steel were used in its construction, which took 3.5 years to complete.
- It said the project’s “smart fence” is more than 6 meters (20 feet) high and its maritime barrier includes means to detect infiltration by sea and a remote-controlled weapons system.
Saudi Arabia Pleads for Missile-Defense Resupply as Its Arsenal Runs Low – Wall Street Journal, 12/7/2021
- Saudi Arabia is running out of the ammunition it uses to defend against weekly drone and missile attacks on its kingdom and is urgently appealing to the U.S. and its Gulf and European allies for a resupply, U.S. and Saudi officials said.
- Over the past several months, Saudi Arabia has been attacked by nearly a dozen ballistic missile and drone strikes launched each week by the Yemen-based Houthi rebels.
- While U.S. officials appeared poised to formally approve the Saudi request, the situation has officials in Riyadh concerned that without a sufficient stock of Patriot interceptors, the sustained attacks could result in significant loss of life or damage to critical oil infrastructure.
- The Saudi government is requesting that the U.S. provide it with hundreds more Patriot interceptors manufactured by Raytheon Technologies, and it has also approached Gulf allies, including Qatar, and European countries.
Factmonster – TODAY in HISTORY
- Delaware became the first state to ratify the U.S. Constitution. (1987)
- The U.S. declared war on Austria-Hungary in World War I. (1917)
- The Japanese attacked Pearl Harbor. (1917)
- America’s final moon mission, Apollo 17, blasted off from Cape Canaveral. (1972)
- Indonesia invaded East Timor, leading to a 25-year occupation. (1975)
- Iraq formally declared to the UN that it had no weapons of mass destruction. (2002)
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