Friday Morning Reads
- Amazon (AMZN) will remove more content from cloud services that violate rules. Reuters
- August class 8 truck orders hit 5 month high at 36,900 units (IYT, YELL, PCAR, JBHT). Act Research
- Two Republicans are questioning FTC on efforts to unwind Illumina (ILMN) acquisition of Grail. Reuters
- Labor Board is looking into complaints against Apple (AAPL). Bloomberg
- Beijing's municipal government wants to take Didi (DIDI) under state control. Bloomberg
- Amazon (AMZN) will soon introduce its own brand of TVs (VZIO). Business Insider
- HSBC (HSBC) wants permanent hybrid work model. Bloomberg
- Apple (AAPL) Watch production will ramp on schedule. Digitimes
- Tesla (TSLA) Cybertruck delayed until next year. Electrek
- Iconiq Motors aiming to go public through SPAC merger (SPACS, IPOXX). Bloomberg
Seeking Alpha wishes our subscribers a great Labor Day Weekend! Wall Street Breakfast won't be published with markets closed on Monday, but tune back in Tuesday.
After squeaking out another round of record closes on Thursday, U.S. stock index futures are ahead by 0.2%, before a jobs report that many are seeing as the next catalyst for the market. Forecasts from economists suggest the U.S. added 750K jobs in August, after rising by 943K in July, while the unemployment rate is expected to inch down to 5.2%, from 5.4% the previous month. Yesterday, new weekly jobless claims weighed in at 340K, which was better than analysts had expected and marked a new low in the pandemic era.
Snapshot: The report could end up being more interesting than Jackson Hole, with fresh data on non-farm payrolls providing a better timeline for the end of the Fed's $120B/month bond buying program. The central bank has related that tapering will start before interest rates are raised, so investors will be closely watching that front. If the jobs report comes in stronger than expected, a tapering announcement could happen in November, but if the numbers are weak, the end of asset purchases could be pushed off.
"We are in the weird world where bad news is good news in terms of risk appetite. Anything that says we might see a more hawkish central bank, that's bad news," said Lee Ferridge, head of macro strategy for North America at State Street Global Markets.
Outlook: A big wild card in the data is the surging Delta variant, which has kept some unemployed people at home and frustrated efforts by employers to boost hiring. Despite the flare-up in cases, the leisure and hospitality sector likely accounted for a big chunk of payroll gains last month, though factory hiring was probably constrained by input shortages. If growth in August meets expectations, it would leave the level of U.S. employment about 5M jobs short of its peak in February 2020. (2 comments)
In an irony that coincides with Labor Day, enhanced pandemic unemployment benefits will be coming to an end this weekend. The assistance, which helped out-of-work Americans during the pandemic, were distributed under several programs created by the CARES Act. Among them: Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation and Federal Pandemic Unemployment Compensation.
Historic safety net: States issued $794B in combined state and federal unemployment benefits from March 2020 through July 2021, according to the Labor Department. That included weekly bonus payments, which were raised by $600/week and then lowered to $300/week, as well as unemployment insurance and assistance for gig workers. The long-term unemployed also collected federally financed weeks of benefits when state aid was depleted.
A year into the pandemic, up to 46.2M people had received at least one week of benefits, amounting to about a quarter of the U.S. workforce, per an estimate from The Century Foundation. About half of U.S. states also ended their involvement in some or all federal unemployment programs in June or July, before their official expiration this weekend.
Go deeper: While it's hard to make direct comparisons, the $794B pandemic figure weighs up against the $128B in unemployment benefits distributed in 2009, the year which unemployment peaked during the Great Recession. Back in 2009, only 14.5M Americans collected at least one benefit payment, which was less than a third of the pandemic annual total. The latest figures are even likely to be understated because some states haven't filed regular data for Pandemic Unemployment Assistance.
er abortion in America is spilling into the corporate sphere after Texas' SB8 law was allowed to go into effect this week by the Supreme Court. The 5-4 ruling saw a conservative bloc of justices hold sway over dissenting views from Chief Justice John Roberts and the court's liberal minority. Also known as the heart-beat bill, the law will ban abortion after six weeks, making exceptions for medical emergencies but not cases involving rape or incest.
Bigger picture: The legislation allows private individuals to sue anyone who "aids or abets" an abortion after six weeks, with the ability to collect at least $10,000 in damages for a successful lawsuit. Over the past decade, many similar state laws were struck down by federal courts on grounds that they conflicted with Roe v. Wade. The next flashpoint will shift to Mississippi, where Supreme Court justices have agreed to consider a law that bars most abortions at 15 weeks.
It'll also be interesting to see the reaction of the business community to SB8, but many are choosing to stay on the sidelines given the backlash it could have on their companies. Notable provocateur Elon Musk, who recently moved to Texas, is sitting this one out, saying he'd "prefer to stay out of politics." But some of the largest dating apps in the country are responding with a pledge to create funds for employees and dependents that need to travel outside of Texas to seek abortions.
Quote: "As I have said before, the company generally does not take political stands unless it is relevant to our business. But in this instance, I personally, as a woman in Texas, could not keep silent," Match Group (NASDAQ:MTCH) CEO Shar Dubey said in a memo. The firm, which is based in Dallas, owns a number of dating companies, including its namesake app Match along with Hinge, Tinder and OkCupid. "Bumble (NASDAQ:BMBL) is women-founded and women-led, and from day one we've stood up for the most vulnerable. We'll keep fighting against regressive laws like #SB8," added the company, which is located in Austin, and went public earlier this year. (4 comments)
White House chief medical advisor Dr. Anthony Fauci would not be surprised if the recommended full regimen of COVID vaccines from Pfizer-BioNTech (PFE, BNTX) and Moderna (MRNA) becomes three doses instead of two. According to Fauci, who heads the National Institute of Allergy and Infectious Diseases (NIAID), giving an additional dose or perhaps a final dose for fully vaccinated people a few months after their initial vaccine regimen will help the immune system to mature. The remarks come before the U.S. is set to roll out COVID-19 booster shots for all Americans in a few weeks.
Cue the debate: For complete immunization, people get three or more doses of polio and diphtheria-tetanus-pertussis vaccines. Vaccinations for hepatitis B and HPV also require third doses, with several months between the second and third shot.
Fauci also presented data from Israel that showed waning coronavirus immunity after about eights months. In Israel, being fully vaccinated now means three jabs (and eligible for its green passport system), with more than 2M of the country's 9.3M people having received a third shot, including 70% over the age of 60 and nearly half those over 50. Israel struck a vaccines-for-data deal with Pfizer back in January that promised to share vast troves of information from its highly digitized healthcare system in exchange for the continued flow of COVID-19 shots.
Back in the U.S.: The White House is planning to invest $3B in the coming weeks to ensure the country can continue to produce COVID-19 vaccines. The funding will be earmarked to companies making ingredients and inputs that go into vaccine production, as well as facilities that fill and finish vaccine vials. Other areas of focus will include lipids, bioreactor bags, tubing, needles, syringes, and personal protective equipment, before a booster campaign kicks off on September 20. (209 comments)
In Asia, Japan +2.1%. Hong Kong -0.7%. China -0.4%. India +0.6%.
In Europe, at midday, London +0.1%. Paris -0.4%. Frankfurt +0.1%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude +0.2% at $70.13. Gold +0.2% at $1815.10. Bitcoin +0.5% at $50083.
Ten-year Treasury Yield +1 bps to 1.3%
Today's Economic Calendar
What else is happening...
Manchin throws a wrench into Biden's $3.5T economic agenda.
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Nikkei gains with Japan's Suga to step down as prime minister.
Reddit reportedly looking to hire advisers for IPO at $15B+ valuation.