Monday Morning Reads
- Record Trade Surplus
- Brexit Crunch Time
- A $900 Billion Plan
- Santa May Have Come Early
- Online Shopping Faces Tough Holiday Test
- ‘This Is Insanity’
- Who Do You Trust?
- What is the State of the Recovery?
- This Recession is Different
From The Weekend:
- Positive view on Airbnb IPO (ABNB, IPOXX). Barron's
- Positive view on Salesforce.com (CRM). Barron's
- Positive views on GS, BK, FITB, TFC, PACW, CMA, CFA. Barron's
- JD.com (JD) will accept China's digital currency. Reuters
- Sony (SNE) aiming to close Malaysia plant. Reuters
- Citigroup (C) is scaling back on plans to have employees in offices amid surge of coronavirus cases in NYC. Bloomberg
- US will not extend TikTok divestment deadline amid ongoing talks (ORCL). Reuters
- FDA's vaccine advisory committee will meet Thursday to decide on emergency approval for Pfizer's (PFE) coronavirus vaccine. The Hill
- 2600 people per week were leaving NYC before the pandemic began and the coronavirus has amplified those trends (ESRT, VNO, SLG). Bloomberg
- HHS Chief Alex Azar says Americans who want to get a coronavirus vaccine should be able to do so by the second quarter (IBB, PFE, MRNA, AZN). Bloomberg
- Goldman Sachs (GS) is mulling new Florida hub for asset management division in blow to NYC. Bloomberg
- Google (GOOG) is trying decide if it should impose penalties on IAC (IAC). WSJ
- US watchdog did not find any wrongdoing with Kodak (KODK) deal. WSJ
- Paysafe preparing to go public (IPOXX). Bloomberg
- Exxon Mobil (XOM) is under pressure from activists to invest in clean energy. WSJ
- US preparing new sanctions on Chinese officials (BABA, BIDU, TCEHY). Reuters
Stimulus appears to be back in the driver's seat that's needed to power the market higher as new coronavirus cases exceeded 200K for a fourth straight day on Saturday and much of California went into lockdown. Weak non-farm payrolls data from Friday, which showed the fewest number of workers (245,000) added to the U.S. economy in six months, had already built on expectations for a coronavirus aid package, helping send stock indexes to fresh all-time highs. Now, a bipartisan group of senators is poised to unveil a new $908B stimulus bill as early as today, though equity futures are holding their breath before any formal announcement. The plan includes $288B in small business aid, $180B in unemployment benefits, $160B for cash-strapped state and local governments, as well as help for troubled sectors, including $17B for the airline industry. Louisiana Republican Senator Bill Cassidy, part of the group behind the effort, also told Fox News Sunday that he was "optimistic" that both President Trump and Senate Majority Leader Mitch McConnell "will come on board" with the proposal.
Sterling slipped 1.5% to $1.3241 overnight after Boris Johnson told the EU that Britain must have "freedom" to make its own rules and cabinet ministers said he should pursue a no-deal Brexit unless Brussels backs down. According to the Times newspaper, Johnson and Ursula von der Leyen, the president of the European Commission, agreed to a "final throw of the dice" this week, but we've heard that many times before. Both sides admit that "no agreement is feasible" without movement on three key issues, including governance, fishing quotas and competition rules, known as the level playing field. A senior No. 10 figure also warned the chances of getting a pact were now "no better than 50-50" after more than four years and five months of talks.
Global demand for Chinese goods keeps growing as protective gear and work-from-home tech products serve as pillars for the nation's overseas trade during the pandemic. China's November exports were up 21% from a year earlier, according to the General Administration of Customs, while imports were 4.5% higher, resulting in a $75.42B trade surplus that topped records set in May. November shipments to the U.S., China's No. 3 trading partner, were meanwhile up 46% compared to a year earlier, and while imports of American goods were ahead by 33%, they were still far below farm and energy levels promised in the Phase One trade deal signed in January. While President Trump has focused on the trade deficit with China, Joe Biden said he would concentrate on IP theft, illegal subsidies and forced "tech transfers," though he wouldn't immediately remove the tariffs that remained on about $370B of Chinese goods.
Airbnb (ABNB) is boosting its IPO price range to $56-$60, from $44-$50, which would see the home-rental company raise as much as $3.1B at a valuation of $42B, sources told the WSJ. DoorDash (DASH), the food-delivery company that is expected to debut Wednesday, also plans to price its shares in a range of $90-$95 a share (already raised from between $75-$85). So far this year, more than $140B has been raised in initial public offerings on U.S. exchanges, far exceeding the previous full-year record high set at the peak of the dot-com boom in 1999, according to data from Dealogic. Also on deck to go public this month are Max Levchin's Affirm Holdings, online video-game company Roblox, and ContextLogic, the parent of discount online retailer Wish.
In an op-ed for The Dispatch, Johns Hopkins Professor Marty Makary slammed the FDA for "holding up COVID-19 vaccine approval" and dubbed the agency's progress "Operation Turtle Speed." "Pfizer (NYSE:PFE) submitted data detailing the safety and effectiveness of its vaccine on Nov. 22, but rather than immediately convening experts, the FDA scheduled a review meeting on Dec. 10, almost three weeks later. As Pfizer's application sits on the shelf at the FDA awaiting authorization, about 27,000 Americans will have died," he added. "As a Johns Hopkins scientist who has conducted more than 100 clinical studies and reviewed thousands more from the scientific community at large, I can assure you that the agency's review can be done within 24 to 48 hours without cutting any corners. They just need to work harder." Note: Bahrain became the second country to grant emergency-use authorization to Pfizer and BioNTech's (NASDAQ:BNTX) vaccine on Friday, while the U.K. became the first this past Wednesday.
JD.com (NASDAQ:JD) has become the first online platform to accept China's central bank digital currency (CBDC), known as the digital yuan. Shoppers will need to have received the homegrown currency as part of a lottery-style experimental giveaway to residents of Suzhou, following another lottery for citizens in Shenzhen, but it's a big step toward normalizing CBDCs. Unlike cryptocurrencies, the PBOC controls the digital yuan, giving the country more power and a remarkable amount of information about what consumers are spending their money on.
While 5G networks are still in their infancy, with 100 wireless carriers worldwide deploying the service in limited areas, the preparation for 6G development is getting started in several regions around the world. Nokia (NYSE:NOK) is leading a group of companies and universities in an EU-funded wireless project called Hexa-X to help jump-start a new generation of the mobile technology. In addition to the program in Europe, there's Next G Alliance and O-RAN Alliance in the U.S., as well as funding for a 6G development group in China. "The main goal will be to develop the vision, the road map and the timeline," said Nokia's Devaki Chandramoul, who is the head of North American Standardization and one of the engineers leading the Hexa-X group. While 5G is known to have data transmission speeds at least 10x greater than 4G - rolled out in 2009 - 6G is expected to use super high-frequency terahertz airwaves and deliver advanced connectivity.
Exxon Mobil (NYSE:XOM) is facing the threat of a proxy fight from Chris James, a hedge fund veteran turned activist investor, whose new firm is going after four of Exxon's 10 board seats. According to the WSJ, Engine No. 1 LLC is preparing to send a letter to the board, urging a greater focus on investments in clean energy while cutting costs elsewhere to preserve its dividend. The activist fund has the support of California State Teachers’ Retirement System and expects other shareholders to be sympathetic to the cause, given widespread frustration over Exxon’s stock performance, which is down 40% YTD. Key to the outcome will be the reaction from Vanguard, BlackRock (NYSE:BLK) and State Street (NYSE:STT), which together control nearly 20% of Exxon's shares. XOM -1.7% premarket.
Mastercard (NYSE:MA) is investigating allegations against Pornhub.com after a NYT opinion piece written by Nicholas Kristof said many of the videos posted on the adult website depicted child sexual abuse and nonconsensual violence. "If the claims are substantiated, we will take immediate action," Mastercard said in a statement, while Pornhub denied the allegations, declaring, "any assertion that we allow CSAM (child sexual abuse material) is irresponsible and flagrantly untrue." Canadian Prime Minister Justin Trudeau also said his government was working with police and security officials to address the issues raised in the column as 20 MPs called for a crackdown on Pornhub, which is effectively based in Montreal. PayPal (NASDAQ:PYPL) has already suspended cooperation with Pornhub, while American Express (NYSE:AXP) has a longstanding policy that prohibits card acceptance on digital adult content websites.
What else is happening...
Pushing into software and services, Cisco (NASDAQ:CSCO) scoops up IMImobile.
In Asia, Japan -0.8%. Hong Kong -1.2%. China -0.8%. India +0.8%.
In Europe, at midday, London +0.4%. Paris -0.8%. Frankfurt -0.4%.
Futures at 6:20, Dow -0.3%. S&P -0.3%. Nasdaq -0.1%. Crude -0.9% to $45.85. Gold -0.4% at $1832.40. Bitcoin +1.1% to $19219.
Ten-year Treasury Yield -3 bps to 0.94%
Today's Economic Calendar