Monday Morning Reads
- Housing Bubble
- World for Risk and Profit
- The Blocksize War
- Investors Grapple with China’s Regulatory Risk
- China’s New Private Tutoring Rules
- U.S. Real Yields Fall to Record Low
- Fed Now Facing Twin Inflation
- Should You Opt Out?
- Rookie Bankers Sour on Wall Street
- Boeing’s Talent Exodus
- Credit Suisse Brain Drain
- Stop Selling Smokes In The U.K.
- Israel’s Spat with Ben & Jerry’s
- You Probably Shouldn’t Claim Social Security at 62
- Make a Call on Quitting Your Job Without Any Regrets
- A Which Will Be More Valuable?
Open Interest Changes:
Investors are gearing up for one of the most eventful weeks of the summer, with futures ticking lower ahead of the busy slate. At the time of writing, Dow futures are off 0.5%, while contracts linked to the S&P 500 and Nasdaq are down 0.3% and 0.1%, respectively. The Fed is scheduled to meet on Wednesday (tapering or inflation comments?), we'll get a print on Q2 GDP (exceeding its pre-pandemic size?), while lawmakers hope to advance an infrastructure deal to a Senate vote (resolving a dispute over public-transit funding?)
Don't forget earnings! About 165 S&P 500 companies are due to report in the biggest week of the season. Tech heavyweights like Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Facebook (FB) and Microsoft (MSFT) will take the spotlight, with the five companies comprising more than a fifth of the total market cap of the S&P 500. The results should illustrate how large businesses are withstanding the pandemic and a recent uptick in inflation.
"This will be a choppy environment for the rest of the year as markets deal with growth that isn't as strong, and markets turn to the potential withdrawal of policy support," said Hugh Gimber, a strategist at J.P. Morgan Asset Management. "You would expect that the spread of the Delta variant would put restrictions in place longer and some supply bottlenecks may not last just a few months."
Going abroad: Chinese regulatory worries resurfaced overnight as Beijing took aim at some of the country’s fast-growing listed companies. Shares of private education firms listed in Hong Kong tumbled as Chinese authorities clamped down on the sector, while the national antitrust authority ordered Tencent (OTCPK:TCEHY) to give up some of its exclusive music licensing rights. By the end of the session, the Shanghai Composite Index dropped 2.3%, while the Hang Seng Index sank nearly 4% for its biggest one-day rout in over a year.
Sentiment on Bitcoin (BTC-USD) turned bullish over the weekend as the world's most popular cryptocurrency topped its 50-day moving average. The positive momentum sent Bitcoin up 12.5% to $39,850 on Monday, its highest level since mid-June and within sight of a $41,341 resistance. Other cryptos are also on the march higher, including Ethereum (ETH-USD), up 8.8% to $2,367, and Ripple (XRP-USD), ahead by 9.6% to $0.67.
What happened? Optimism is still running high from the last week's "B Word" event, where Ark Invest's Cathie Wood and Square's (SQ) Jack Dorsey touted the potential for Bitcoin and encouraged corporations to add the asset to their balance sheets. Tesla's Elon Musk also disclosed that SpaceX (SPACE) owns Bitcoin and that he wants the world's largest crypto "to succeed." Meanwhile, environmental concerns over mining and Chinese regulatory worries appear to have worn off, while traders are exiting bets on declines at a record pace.
"With a record $1.2B in shorts liquidated over the past 24 hours, the outlook and momentum for the week ahead are positive," declared Ryan Rabaglia, global head of trading at digital asset platform OSL. "Over the last five trading sessions we've seen general near-term bullishness in the market, driven by key technicals, as well as recent positive comments."
Go deeper: Amazon is said to be looking at accepting Bitcoin payments by the end of the year and is exploring its own token for 2022. According to City A.M., the e-commerce behemoth is expected to take Ethereum, Cardano (ADA-USD) and Bitcoin Cash (BCH-USD) as payment before the company brings another eight or so of the most popular cryptos online. Last week, Amazon even advertised a job vacancy for a digital currency product lead, possibly signaling further plans to accept cryptocurrency. (19 comments)
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New daily COVID-19 cases in the U.S. have averaged more than 49,300 over the week ending Friday, according to data from Johns Hopkins University. That's an increase of nearly 60% from a week ago, and 4x the lowest 2021 average of 11,299 recorded on June 22. COVID-related hospital admissions have also surged in the country, with 680 hospitalizations on Saturday, more than double the number two weeks ago.
Snapshot: 68.8% of U.S. adults have received at least one COVID-19 shot, while the proportion of fully immunized adults stands at 59.9% nationally. A new poll from the Associated Press-NORC also suggests that the majority of unvaccinated American adults are unlikely to get COVID-19 shots amid concerns that they do not offer protection against the highly contagious Delta variant. Delta now accounts for over 83% of newly sequenced COVID-19 cases in the U.S., per CDC director Rochelle Walensky.
Meanwhile, Pfizer (NYSE:PFE) said earlier this month it is starting to see waning immunity from its two-dose vaccine, and now plans to seek authorization from the FDA for a booster dose. The first of those boosters would go Americans who are immune compromised, White House chief medical advisor Dr. Anthony Fauci announced on Sunday. "We're going in the wrong direction," he added, saying that the recommendation of mask wearing by the vaccinated is "under active consideration."
More data: Back in January, Israel struck a vaccines-for-data deal with Pfizer that promised to share vast troves of information with the drug giant in exchange for the continued flow of COVID-19 shots. The latest numbers suggest that the effectiveness of the jab from Pfizer in preventing infection has dropped to 39% in the country - which has one of the highest vaccination rates in the world - though the results could be skewed due to the different ways of testing the vaccinated people. The report also suggests that the two-dose vaccine was 88% effective in preventing hospitalizations and 91% effective against severe disease. (191 comments)
The electric vehicle sector keeps buzzing along as SPAC deals and IPOs help pour fresh money into technology and development. Elon Musk noted that it was quite likely that Tesla (TSLA) will have a plant in India if it is successful in its bid to begin sales with imported vehicles and tariff relief. He also pointed out that import duties in India are the highest in the world by far of any large country, which is inconsistent with the nation's climate goals for clean energy vehicles to be treated the same as diesel or petrol vehicles. Tesla reports Q2 results after the bell.
Sector watch: Lucid Motors (LCID) shares are set to begin trading on the Nasdaq this morning after the company's SPAC deal was approved by shareholders. Lucid and Churchill Capital Corp. IV (CCVI), a blank-check company, announced the deal back in February, which led to an investment of about $4.5B in funding to Lucid. "Lucid has further increased its momentum as we gear up to make the first customer deliveries of our Lucid Air lineup of electric sedans later this year," CEO Peter Rawlinson said in a statement. "We are making significant investments in the long-term growth and innovation of our company, and we will continue to bring to bear world-class technology to positively impact mankind's transition to sustainable mobility."
Last week was also busy: Faraday Future Intelligent Electric (FFIE) began trading with a solid gain after a SPAC merger, while upstart Electric Last Mile Solutions (ELMS) landed a bull rating from Wedbush Securities on an intriguing EV moat opportunity. Some of the biggest gainers of the week were GreenPower Motor (GP) +5.1%, XPeng (XPEV) +5.1% and Fisker (FSR) +3.9%. Meanwhile, Full Truck Alliance (YMM) tanked 36.9% to a post-IPO low and Lordstown Motors (RIDE) peeled off 12.4%. (91 comments)
In Asia, Japan +1%. Hong Kong -3.9%. China -2.3%. India -0.2%.
In Europe, at midday, London -0.3%. Paris -0.3%. Frankfurt -0.4%.
Futures at 6:20, Dow -0.5%. S&P -0.3%. Nasdaq -0.1%. Crude -0.6% at $71.64. Gold +0.4% at $1808.60. Bitcoin +10.4% at $38189.
Ten-year Treasury Yield -2 bps to 1.37%
Today's Economic Calendar
What else is happening...
Business optimism at highs amid supply chain woes, tight labor market.
VTOL aircraft company, Lilium, confident about SPAC deal.
COVID cases rising... Barron's still touts six travel stocks.