Monday Morning Reads
- Post-Covid-19 Economy Amid Diverging Fortunes
- If China Is As Bad As Its Critics Say
- How Brexit Ruined Easter for Britain’s Chocolate Makers
- A 33-Year-Old Fueling Crypto Boom
- Inside Corporate America’s Frantic Response
- Goldman Axes Short Dollar Call as Higher U.S. Yields Spoil Bet
- South Korea’s LG Becomes First Major Smartphone Brand to Withdraw From Market
- Amazon’s Clashes With Labor
- Amazon Illegally Fired Activist Workers
- GameStop to Offer Up to $1 Billion in Shares;
- Tesla China Demand Fuels ‘Home Run’
- The 4 Types of Robinhood Traders
- The Psychology of Investing in Bitcoin
Good news for the movie industry has finally arrived as tentpole Godzilla vs. Kong gave a shot in the arm for theaters and Hollywood. The film from Warner Bros. (NYSE:T) and Legendary Entertainment generated $32.2M over Easter Weekend and garnered $48.5M in the U.S. and Canada during its first five days of release. A monstrous debut was also seen abroad, where the movie added an additional $71.6M to its box office haul. Since opening last week internationally, the film has tallied $285.4M.
Quote: "For anyone who may have doubted the pent-up demand for moviegoing, this performance is yet another sign of just how resilient the theatrical industry can be," said Shawn Robbins, chief analyst at Boxoffice.com.
Not only did GvK post the best pandemic opening numbers since March 2020, but the title opened in more than 3,000 theaters in North America over the weekend, the most of any movie during the pandemic. More than 90% of U.S. cinemas have so far reopened, according to Warner Bros, though they are operating at reduced capacity to meet social distancing guidelines.
Outlook: The turnout among ticket buyers was especially notable given that the film is available for free for subscribers of HBO Max. Warner Bros last year decided to stream all of its 2021 movies on the same day they debut in cinemas, infuriating some filmmakers and actors, but the latest results may suggest the two can exist simultaneously. "To me, streaming and movie going were never really true enemies because they're two very different experiences," Robbins continued. "For the past year, people have been stuck at home and movie going has left our daily lives, and not by choice. Now that choice is back and we're seeing that people still want to go to the movies." (31 comments)
Investors are digesting the March nonfarm payrolls report a bit late as markets were closed at the end of the week for Good Friday. The strong bounce in U.S. job growth, compounded with an accelerating vaccine rollout, is giving traders renewed enthusiasm after the S&P 500 topped the 4,000 milestone for the first time on Thursday. Overnight, the index rose another 0.5%, along with the Nasdaq and Dow Jones Industrial Average.
By the numbers: The NFP report smashed expectations, with the U.S. adding 916,000 jobs in March, the highest since August 2020. Growth was led by gains in leisure and hospitality, public and private education, and construction, while the unemployment rate fell to 6% from 6.2%. Helping boost sentiment is expected stimulus from a coming infrastructure proposal, as well as the current pandemic picture. The U.S. reported another daily record of new COVID vaccinations on Saturday, pushing the weekly average of new shots per day above 3M.
Other data this morning is expected to show a rebound in the U.S. services sector. The ISM Services Index, released at 10 a.m. ET, will likely display activity accelerating in the U.S. industries hardest hit by shutdowns and stay-at-home orders. A services recovery has so far lagged behind manufacturing, and investors will be watching the figures to gauge the start of a broader economic revival.
Other notable movers: WTI crude futures (CL1:COM) slipped 2% overnight, paring the big gains made in the previous session after OPEC+ agreed to gradually raise production from May through July. Tesla (TSLA) shares meanwhile popped premarket, climbing 8% to $713/share, after Q1 deliveries topped estimates and Wedbush weighed in with an upgrade. (7 comments)
President Biden's second major legislative initiative so far looks unlikely to draw more bipartisan support than his first $1.9T COVID-19 relief package. Republicans are taking aim at the $2T infrastructure plan released last week, with Senator Roy Blunt urging the administration to significantly scale back the project if Biden wants GOP support. "If we'd go back and look at roads and bridges and ports and airports, and maybe even underground water systems and broadband, you'd still be talking about less than 30% of this entire package," he said on Fox News Sunday. Senate Republican leader Mitch McConnell has also vowed to fight the scheme at "every step of the way," saying the proposal would increase debt and raise taxes.
It may not matter. Over the weekend, Energy Secretary Jennifer Granholm said Biden is willing to push through the American Jobs Plan. He would prefer to have GOP backing, she told CNN's State of the Union, but if that does not work, he would likely support using reconciliation to allow Democrats to pass it in the Senate. The White House is also planning a second proposal in the coming weeks to address so-called social infrastructure, including childcare, healthcare and college tuition, which would be paid for by tax increases on wealthy households.
Bigger picture: The infrastructure initiative, as well as the measures it contains to curb climate change (net-zero emissions by 2050), may be the next tailwind for ESG funds. The investments already captured $51.1M of net new money from investors in 2020, marking their fifth consecutive annual record, according to Morningstar. 3 out of 4 sustainable funds even ranked in the top half of their investment category over the past three years.
Go deeper: Barron's this weekend discussed some stocks that may enjoy further gains if the market sees an infrastructure plan moving towards passage. Among them are engineering and construction companies like MasTec (NYSE:MTZ) and Vulcan Materials (NYSE:VMC), as well as clean-tech winners including TPI Composites (NASDAQ:TPIC), Sunrun (NASDAQ:RUN) and SolarEdge Technologies (NASDAQ:SEDG). Discover another 10 stocks that could benefit from the bill. (81 comments)
Stocks aren't the only market to have rallied for much of the last year. In fact, the real estate sector has seen some of the fastest house price growth in more than a decade and there aren't many communities where prices have fallen since the pandemic. Despite rising costs and mortgage rates, homes are still getting snatched off the market at a record pace, per a new Redfin report. About 59% of homes that went under contract had an accepted offer within two weeks of hitting the market, while more than 40% of homes sold above the original asking price.
U.S. home prices soared 11.2% in January, their biggest annual increase in 15 years, according to the S&P CoreLogic Case-Shiller national index. The data also "remained consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes," declared Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. Roughly one-quarter of American workers are now doing their jobs from home, along with children who are going to school online.
Flashback to 2007? Not really. Many argue that this time around buyers have higher credit ratings and are putting down more cash up-front. Economists also forecast sales to rise again this year, while there are fewer systemic risks and the market is critically undersupplied. New construction hasn't kept up with household demand, and buyers are competing fiercely for a limited number of homes. While financial firms are still packaging mortgages as securities, the vast majority of those today have government backing.
Outlook: "Looking ahead, Biden's infrastructure plan aims to incentivize zoning for multi-family homes, which could increase the supply of affordable homes and provide even more people a path to homeownership," said Redfin chief economist Daryl Fairweather. "But there is no guarantee the incentives would be enough for local governments to change their zoning practices."
Once one of the top smartphone makers in the U.S., LG Electronics is exiting the mobile business after talks with potential buyers came to an end. The South Korean company was early to market with a number of cell phone innovations (ultra-wide angle cameras and powerful stereo speakers), and at its peak in 2013, it was even the world's largest smartphone manufacturer behind Samsung (OTC:SSNLF) and Apple (NASDAQ:AAPL). Those two will likely gobble up its market share, which stands at 10% in North America.
What happened? Its flagship models were hurt by both software and hardware casualties, while slower software updates saw the brand steadily slip out of favor. Analysts have also blasted the company for lack of expertise in marketing compared to Chinese rivals. While LG was the first to adopt Google's (GOOG, GOOGL) Android OS, its smartphone division has recorded nearly six years of losses totaling about $4.5B and the time had come for an exit.
It's not the first time this has happened. Other well-known mobile brands like BlackBerry (BB), Nokia (NOK) and HTC (OTC:HTCKF) have also tumbled from lofty heights and have worked to transform their companies away from smartphones.
The future: "LG's strategic decision to exit the incredibly competitive mobile-phone sector will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as platforms and services," the company said in a statement.
What else is happening...
Office REIT stocks lag market as office occupancy stays low.
In Asia, Japan +0.8%. Hong Kong closed. China closed. India -1.7%.
In Europe, at midday, London closed. Paris closed. Frankfurt closed.
Futures at 6:20, Dow +0.6%. S&P +0.5%. Nasdaq +0.5%. Crude -2.2% to $60.15. Gold -0.3% at $1723.90. Bitcoin -0.3% to $57457.
Ten-year Treasury Yield flat at 1.72%
Today's Economic Calendar