U.S. Stocks Slip on Stimulus Worries – Wall Street Journal, 12/11/20
- U.S. stocks slipped Friday as talks on a Covid-19 relief package faced fresh setbacks, with major indexes on track to end the week lower.
- U.S. talks on a Covid-19 relief package faced fresh setbacks recently. After signs of progress amid a bipartisan push for a roughly $900 billion stimulus deal, Senate Republicans suggested Thursday that they couldn’t accept some aspects of the proposals.
- Despite lingering concerns about weak growth, stimulus talks and the pandemic, investors are betting that widespread rollout of Covid-19 vaccines could be well under way by next year.
- A Food and Drug Administration panel Thursday recommended approving a Covid-19 vaccine developed by Pfizer and BioNTech, paving the way for the FDA to grant emergency-use authorization as early as Friday.
- In Europe, the Stoxx Europe 600 fell 0.7% after U.K. Prime Minister Boris Johnson said there was a strong possibility that efforts to reach a last-minute deal on trade with the EU would fail.
- European Commission President Ursula von der Leyen cautioned Friday that “positions remain apart on fundamental issues.”
- The British pound fell 1.1% against the dollar to $1.3156.
- The U.K.’s current commercial and trading ties with the EU expire Jan 1. Intensive talks are meant to take place this weekend.
- If a deal can’t be struck, both sides are preparing for significant border disruption affecting trade worth close to $900 billion a year.
- A hard split between the U.K. and EU could pile on pain to a global economy that has already been reeling this year under the stress of Covid-19.
- In corporate news, Disney shares gained 8.2%. The entertainment giant said Thursday world-wide subscriber count for its flagship streaming service Disney+ could triple to 260 million by 2024.
Coronavirus Live Updates: U.S. Cases, Deaths Continue to Surge – Wall Street Journal, 12/11/20
- Newly reported coronavirus cases in the U.S. rose for the fourth day in a row, topping 224,000, the second-highest number of new cases the country has reported in a single day.
- The nation’s death toll for Thursday surpassed 2,900, lower than the record set the previous day but still the country’s second-highest number of fatalities in one day from Covid-19, according to data compiled by Johns Hopkins University.
- Hospitalizations were again at an all-time high, with 107,258 people in hospitals because of Covid-19 as of Thursday, according to the Covid Tracking Project. More than 21,000 patients were in intensive-care units because of the disease, another record.
- A number of states continued to struggle with recent surges of infections.
- California reported more than 33,500 new cases for Thursday, slightly lower than Wednesday’s record total.
- The rising case numbers prompted several states to impose new social-distancing measures.
- In Pennsylvania, which reported more than 12,000 new cases for the first time since Dec. 4, Gov. Tom Wolf on Thursday instituted new restrictions on dining, retail and social gatherings.
- The new restrictions include a ban on extracurricular activities at schools, a suspension of indoor dining and limits on indoor events to 10 people and outdoor events to 50. The new measures go into effect Dec. 12 and remain in place until Jan. 4.
- Virginia Gov. Ralph Northam on Thursday issued an executive order imposing a statewide curfew to keep residents at home late at night, an expanded mask mandate to include all indoor settings and outdoor settings where social-distancing isn’t possible and new limits to the size of social gatherings. The new measures go into effect Dec. 14 and last until Jan. 31.
- Ohio Gov. Mike DeWine, meanwhile, announced an extension of an overnight curfew that will remain in effect until Jan. 2. Thursday marked the state’s fourth-highest case count to date, with 11,738 new Covid-19 infections, Mr. DeWine said.
- The number of new infections across Europe’s biggest economies remained stubbornly high this week, dashing hopes for a broader reopening ahead of the holiday season.
- Germany registered a new record in daily infections and deaths. The government’s disease-control institute reported 29,875 daily new infections, over 6,000 more than Friday a week ago, and a record number of 598 deaths.
- In France, the seven-day rolling average of daily new cases stood at more than 11,000 as of Wednesday evening.
- That’s a significant decline from the November peak of more than 50,000 daily cases, but it’s still more than double the target the government had set for itself to end the country’s lockdown on Dec. 15.
- As a result, French Prime Minister Jean Castex canceled plans to allow people to stay out late on New Year’s Eve. Cinemas, theaters and museums—which had expected to reopen next week—will remain closed for at least another three weeks. Bars and restaurants will remain closed until at least Jan. 20, as initially planned.
- Authorities will enforce a curfew from 8 p.m. to 6 a.m. starting Dec. 15 and increase police control to ensure it is respected, Mr. Castex said. “We can’t let our guard down,” he added.
FDA Panel Endorses Covid-19 Vaccine – Wall Street Journal, 12/10/20
- A Food and Drug Administration advisory panel recommended approval of the Covid-19 vaccine developed by Pfizer and BioNTech SE, clearing the way for the FDA to grant emergency authorization of the vaccine as early as Friday.
- The approval—by a vote of 17-4 with one abstention after a daylong hearing—came as Covid-19 infections continued surging, claiming about 290,000 American lives.
- In its vote to approve, the panel said the benefits of the vaccine outweigh the risks for people 16 years of age and older.
- At least two of the patients who received the vaccine this week in England had allergic reactions after getting the vaccine.
- Various panel members called on the FDA and Pfizer to do further study of the issue.
Lululemon Gets Another Sales Bump from Cooped-Up Shoppers – Wall Street Journal, 12/10/20
- Lululemon Athletica reported a big jump in sales and profits in the most recent quarter, as pandemic-weary shoppers snapped up its athletic apparel and other comfy gear, but it offered a less rosy prognosis for the year-end period as Covid-19 cases continue to surge.
- Net revenue increased 22% to $1.1 billion for the three months to Nov. 1, compared with $916.14 million a year ago.
- Comparable sales—which typically include stores open at least a year and e-commerce—jumped 19%, driven by online sales.
- Direct-to-consumer revenue increased 94% in the most recent period.
- It represented 42.8% of total net revenue, compared with 26.9% for the same period last year.
- Comparable bricks-and-mortar sales remained depressed, however, declining 17% in the recent period.
- Net income rose 12.3% to $143.6 million, compared with $126 million last year.
Broadcom Stock Slips Even as Chip Maker Beats Earnings Estimates – Barron’s, 12/10/20
- Chip maker and software infrastructure supplier Broadcom shares slipped after the company warned of weak demand for the products it sells to enterprise customers, and reshuffled its executive team.
- Sales rose to $6.47 billion from $5.78 billion a year ago.
- Broadcom reported fiscal fourth-quarter net income of $1.32 billion, which amounts to $2.93 a share, compared with a net profit of $847 million, or $1.97 a share a year ago.
- Adjusted for items such as stock-based compensation, non-GAAP earnings were $6.35 a share.
- The consensus estimate was for adjusted earnings of $6.25 a share, on sales of $6.43 billion.
- Broadcom’s chip business reported sales of $4.83 billion, a gain of 6% from the year-ago period. Infrastructure software sales rose 36% to $1.64 billion. Analysts had expected chip sales of $4.78 billion and software sales of $1.63 billion.
- The company said it was raising its target dividend by 11% to $3.60 a share, for each fiscal quarter in 2021.
- Broadcom also said late Thursday that it had appointed Kristen Spears to the CFO job, and Charlie Kawwas to the role of chief operating officer. Broadcom’s current CFO, Tom Krause, will become president of the infrastructure software group.
- The company said that it expected fiscal first-quarter sales of $6.6 billion, which came in above Wall Street estimates of $6.5 billion. The company’s fiscal first quarter ends in January.
Oracle beats quarterly profit estimates on cloud services boost – Reuters, 12/10/20
- Oracle beat Wall Street estimates for second-quarter profit and revenue on Thursday, as remote work trends boosted cloud product and software licensing sales.
- Total revenues rose 2% to $9.8 billion. Analysts were expecting revenue of $9.79 billion.
- Net income rose to $2.44 billion, or 80 cents per share, in the second quarter ended November 30, from $2.31 billion, or 69 cents per share, a year earlier.
Costco Keeps Drawing Homebound Shoppers – Wall Street Journal, 12/10/20
- Costco Wholesale reported strong quarterly sales Thursday as homebound Americans continue to spend more on food, homegoods and fitness products during the pandemic, especially the high-income shoppers that make up much of the warehouse chain’s shopper base.
- Revenue grew to $43.2 billion in the quarter, from $37 billion a year earlier.
- Comparable sales, those from stores or digital channels operating for at least 12 months, rose 17.1% during the quarter ended Nov. 22, excluding the impact of gasoline sales and currency movements.
- The retailer’s e-commerce sales jumped 86% in the quarter.
- Profit also rose during the quarter to $1.17 billion, up from $844 million in the same period last year.
Disney+ Could Hit 260 Million Subscribers by 2024, CEO Bob Chapek Says – Wall Street Journal,12/10/20
- Walt Disney’s flagship streaming service Disney+ is growing at such a clip that the company’s world-wide subscriber count could triple to 260 million by 2024, the company said Thursday.
- That is a massive increase from its current count of 86.8 million subscribers worldwide.
- Disney+ has already surpassed the company’s previous guidance, when it said it hoped to reach between 60 million and 90 million subscribers by 2024.
- In addition to Disney+, the company said its Hulu service has 38.8 million subscribers and ESPN+ has close to 12 million subscribers.
- The company said Thursday that it expects the three services to collectively have between 300 million and 350 million subscribers by the end of 2024.
- Disney is raising the monthly price of Disney+ $1 to $7.99 next March as it is dramatically increasing its spending on TV shows and movies for the service.
- Still, Disney said it will continue to release its biggest movies exclusively in theaters, falling short of matching the vast shift AT&T’s Warner Bros. announced last week when it said it will simultaneously release all of its 2021 films both in theaters and on its HBO Max streaming service.
Lockheed Martin to join Japan’s new fighter jet program: Nikkei – Reuters, 12/11/20
- Lockheed Martin, the maker of the F-35 stealth jet, will join a project led by Mitsubishi Heavy Industries (MHI) to build a new fighter plane that Japan’s air force is expected to field by the mid 2030s, The Nikkei newspaper reported.
- Lockheed’s participation as a junior partner in development, had been expected after it earlier proposed a hybrid design based on its F-35 and F-22 jets. Japan’s Ministry of Defense awarded MHI the primary role in October.
- The new fighter, which is known as the F-3 or F-X and is expected to cost around $40 billion, will replace Japan’s F-2, which was jointly developed by MHI and Lockheed more than two decades ago.
Investors swap China holdings from Wall Street to Hong Kong as delisting threat brews – Reuters, 12/10/20
- Global fund managers are reducing their holdings in U.S-listed Chinese companies such as Alibaba, Netease and JD.com as risks grow they will be forced off American exchanges, switching instead into shares of the companies listed in Hong Kong.
- Delisting risks surfaced last September, when U.S. President Donald Trump’s administration explored moves to kick Chinese companies off Wall Street unless they abide by U.S. accounting standards, part of an escalating standoff between the world’s top two economies.
- The threat is now real. The Holding Foreign Companies Accountable Act has been passed by both Chambers of the U.S. Congress and should soon be signed into law by Trump.
- Once law, foreign issuers in the United States which decline a review of their audits for three years can be delisted.
Corporate America’s Borrowing Binge May Be Ending – Wall Street Journal,12/10/20
- The record corporate borrowing boom fueled by the Federal Reserve’s pandemic response may be coming to an end.
- Wall Street bankers and investors are preparing for a sharp drop in corporate bond sales next year.
- Companies with investment-grade credit ratings will likely issue $1.1 trillion of new bonds in 2021, a 32% reduction from this year, according to research by Barclays.
- Analysts at Bank of America forecast that net new corporate bond issuance will be $63 billion next year.
- That would be the lowest total since the bank began tracking it in 2002.
- A steep decline in bond borrowing would be a sign that corporate chieftains feel less need to buffer balance sheets and that they will be spending some of the $2.1 trillion amassed earlier this year.
US ECONOMY & POLITICS
GOP Leaders See Bipartisan Group’s Covid-Aid Effort Falling Short – Wall Street Journal, 12/10/20
- Top Senate Republicans signaled Thursday they wouldn’t accept a bipartisan group’s efforts to craft a compromise on state and local governments and liability protections during the pandemic, undercutting the coalition’s attempt to break the months-long impasse over a coronavirus relief package.
- Democrats continued to throw their support behind the bipartisan group working on a $908 billion proposal, leaving in question whether they would be willing to support an aid bill without funding for states and localities.
- Aides to Senate Majority Leader Mitch McConnell on Wednesday night told the staff of House Speaker Nancy Pelosi (D., Calif.), Senate Minority Leader Chuck Schumer (D., N.Y.) and House Minority Leader Kevin McCarthy (R., Calif.) that he didn’t see any possible path from the bipartisan group on those two contentious issues that would be acceptable to Republicans, according to a senior Democrat familiar with the conversations.
- Mr. McConnell’s aides conveyed to Democratic leadership staff that the liability ideas being discussed by the bipartisan group fell short of what Republicans felt was necessary, according to the Democrat familiar with the conversations, dimming hopes for progress on the issue.
- “My sense is that they’re not going to get there on the liability language,” Senate Majority Whip John Thune (R., S.D.) told reporters Thursday. “Even though they spent a lot of time trying to come up with sort of creative, innovative solutions to it, they’re just not going to be able to thread the needle.”
- Mr. Thune indicated some lawmakers were holding out, pushing for votes on various measures they have championed, at a time when the Senate is also considering a controversial defense bill.
- Sens. Bernie Sanders (I., Vt.) and Josh Hawley (R., Mo.) said they were also pressing for a vote on a second round of the $1,200 direct checks approved in March in any new coronavirus aid package.
U.S. producer prices increase modestly in November – Reuters, 12/11/20
- U.S. producer prices barely rose in November, supporting views that inflation would remain benign in the near term as a flare up in new COVID-19 infections restrains the labor market and demand for services.
- The producer price index for final demand edged up 0.1% last month after increasing 0.3% in October, the Labor Department said on Friday. That was the smallest gain since April.
- In the 12 months through November, the PPI advanced 0.8% after increasing 0.5% in October.
- Excluding the volatile food, energy and trade services components, producer prices inched up 0.1%.
- The so-called core PPI climbed 0.2% in October.
- In the 12 months through November, the core PPI gained 0.9% after rising 0.8% in October.
U.S. Consumer Sentiment Rose in Recent Weeks – The WSJ, 12/11/20
- The University of Michigan’s index of consumer sentiment climbed to 81.4 in the two weeks ended Dec. 9, from 76.9 in November.
- Economists surveyed by The Wall Street Journal had expected a reading of 75.5.
Barr Worked to Keep Hunter Biden Probes from Public View During Election – Wall Street Journal, 12/10/20
- Attorney General William Barr has known about a disparate set of investigations involving Hunter Biden’s business and financial dealings since at least this spring, a person familiar with the matter said, and worked to avoid their public disclosure during the heated election campaign.
- One investigation became public this week after federal investigators served a subpoena on Hunter Biden. The subpoena sought detailed financial information in connection with a criminal tax investigation by the U.S. attorney’s office in Delaware, according to people familiar with the matter.
- Federal prosecutors in Manhattan had also been looking at Hunter Biden’s business and financial dealings, as part of a broader criminal investigation that two people familiar with the matter described as an international financial investigation that had been going on for at least a year.
- Hunter Biden is implicated in that investigation but was never a specific target for criminal prosecution, the people said.
- The federal scrutiny dates back to 2018, the people familiar with the matter said.
House Leaders Clash Over Swalwell’s Role in China Spy Probe – Wall Street Journal, 12/10/20
- House GOP leader Kevin McCarthy called for Rep. Eric Swalwell to be removed from office over allegations that the lawmaker was targeted by a suspected Chinese spy, prompting House Speaker Nancy Pelosi to rise to the defense of her fellow California Democrat.
- Mr. Swalwell was named in a report by Axios earlier this week that said a Chinese intelligence operative developed ties with local and national California politicians, in what U.S. officials believe was a political intelligence operation.
- The operative, known as Fang Fang or Christine Fang, fundraised for Mr. Swalwell’s 2014 re-election campaign and helped put an intern in his office, according to the report.
- Mr. Swalwell serves on the Intelligence Committee, which investigated President Trump last year for repeatedly pressuring the president of Ukraine to investigate Joe Biden’s son, Hunter Biden, in an effort to hamper his eventual 2020 opponent.
EUROPE & WORLD
Markets Wake Up to Risks of Disruptive Brexit – Wall Street Journal, 12/11/20
- The pound and British stocks fell on Friday ahead of a crunch weekend of talks that could see a disruptive break between the U.K. and the European Union.
- The pound fell more than 1% against both the dollar and euro on Friday, as the two sides failed to agree on a free-trade deal.
- The lack of an agreement would see the U.K. fall back on bare-bones World Trade Organization rules in its trade with the EU. That would mean tariffs from January on some trade between Britain and Europe for the first time in half a century.
- The EU takes 43% of U.K. exports.
- Ursula von der Leyen, president of the European Commission, and Boris Johnson, the British prime minister, set a deadline of Sunday for negotiators to thrash out an agreement over issues including fishing rights and how to maintain similar standards for products and labor markets.
- Both sides again warned people to be ready for no deal on Friday.
China Detains Bloomberg News Staff Member in Beijing – Wall Street Journal, 12/11/20
- Chinese authorities have detained a local staff member working in the Beijing bureau of Bloomberg News on suspicion of endangering national security, the news organization said.
- Haze Fan, a Chinese national, was seen being escorted from her apartment building by plainclothes security officials shortly after being in touch with a Bloomberg editor on Monday, Bloomberg News reported Friday evening Beijing time.
- Bloomberg editor-in-chief John Micklethwait, senior executive editor Madeleine Lim, and Greater China executive editor John Liu told China-based staff on a conference call that Chinese authorities told Bloomberg Ms. Fan’s detention wasn’t related to her work, according to people familiar with the matter.
- Staff were told they could continue with their work since the company believed Ms. Fan’s detention wasn’t work related, and that the company is trying its best to support Ms. Fan and her family, the people said.
- Germany and Italy declared war on the United States. (1941)
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