Morning Reads
- Many Are Trying
- US Sanctions Help China Supercharge Its Chipmaking Industry
- Dutch Government Activates ‘Early Warning’
- Italy Says Proposal to Cap Gas Prices
- Biden Says He Is Considering Seeking a Gas Tax Holiday
- Are High Prices Unpatriotic
- Inflation Collides With Growth
- More Stock Market Losses
- Goldman Warns US Recession Risk
- Crypto’s Latest Meltdown
- US Home Prices to Sink
- Why You Might Buy Your Next Car Online
- Anticipating U.S. Downturn
- Kellogg to Separate Into Three Businesses
- Rural America Waits…and Waits
- Shatters Record at $103.5 Million
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Pediatricians, children's hospitals and pharmacies across the U.S. will begin administering COVID-19 vaccines today to kids between 6 months and 5 years old, after the FDA and CDC authorized the jabs last week for the country's youngest children under emergency approval. Only 18% of parents say they will vaccinate their kids in the age group as soon as possible, according to recent poll from the Kaiser Family Foundation, due to the lack of "enough information about the vaccines' safety and effectiveness." A similar dynamic played out after the shots opened to children aged 5 to 11 last November, with less than a third of that demographic getting vaccinated (compared to the 75% fully vaccinated U.S. population over the age of 12).
Snapshot: Parents of infants, toddlers and preschoolers will have the option of a three-dose regimen from Pfizer-BioNTech (PFE, BNTX) that spans nearly three months, or a two-shot series from Moderna (NASDAQ:MRNA) that takes four weeks. The vaccines use the same mRNA technology given to adults, but differ in their dose sizes. Roughly 18M youngsters are eligible for the jabs, which were shown to have efficacy (in preventing COVID) of between 36.8% and 50.6% for Moderna's shot. Pfizer's effectiveness was determined not to be reliable due to the low number of COVID-19 cases that occurred among study participants, though it was found to trigger a comparable immune response seen in adults.
According to the CDC, 480 children under the age of five have died from COVID-19 through May 2022, while more than 30,000 children in the U.S. have been hospitalized, making the disease more dangerous than flu for little kids. Some children can also have lasting symptoms known as "long COVID," while infections can spread within a household, or to adults that may be more vulnerable. The CDC is even advising vaccination for those who already had COVID-19 to protect against reinfection, with an estimated 75% of children showing evidence of having had the disease.
Not everyone is on board: While Florida doctors can get access through federal distribution channels, the state has been an outlier in not pre-ordering COVID vaccines for kids. Florida's Department of Health is recommending against giving coronavirus vaccines to healthy children, saying there is "very little benefit" for them and "certain risks may outweigh the benefits." Others that may be hesitant to jab their younger kids cite natural immunity, limited trial data based on small number of cases, questions about overall effectiveness and unknown long-term side effects from the vaccine. (15 comments)
Large swings are hitting the cryptosphere as Bitcoin (BTC-USD) struggles to hold above the key $20,000 level. The popular token plunged 15% to $17,787 on Saturday, before rebounding above $20,000 with a surge of similar magnitude on Sunday (stock futures are also bouncing back from a brutal week). Currently changing hands at around $21,168, Bitcoin is still off about 70% from the all-time high of $67,802 seen in November, which preceded the Fed's aggressive rate hike cycle that threatens to drain liquidity from markets.
Flashback: Red flags of bigger crypto trouble emerged in May following the collapse of the Terra (UST-USD), a dollar-pegged algorithmic stablecoin project. Growing questions about insolvency ensued after major crypto lending firm Celsius shocked the market last week by pausing all withdrawals, swaps and transfers between accounts. Coinbase (COIN) and BlockFi then announced they would lay off nearly a fifth of their workforce, while crypto hedge fund Three Arrows Capital failed to meet margins calls from lenders amid a spate of bad bets.
"It's very unfortunate that there was an inflation of financial innovation, which is the real story over here," said Chad Cascarilla, CEO of blockchain infrastructure platform Paxos. "Instead, we had financial instability because of this opaque leverage. You just couldn't tell where all these risks were building up. And really, in some ways, it's just an age-old story: you're borrowing short, and lending long. I think it's really unfortunate that people lost money, and I think in some ways it will set back the space, because you will lose some early adopters. On the other hand, the fundamental technology here and the adoption curve of the institutions that are coming in - like how you can get your financial system to operate at the speed of the internet - those are things that need to happen."
Where do crypto prices go from here? "If the market goes higher, everyone breathes a sigh of relief, things will get refinanced, people will raise equity, and all of the risk will dissipate. But if we move much lower from here, I think it could be a total shitstorm," said Adam Farthing, chief risk officer at crypto liquidity provider B2C2. "There is a lot of credit being withdrawn from the system and if lenders have to absorb losses from Celsius and Three Arrows, they will reduce the size of their future loan books which means that the entire amount of credit available in the crypto ecosystem is much reduced. It feels very like 2008 to me in terms of how there could be a domino effect of bankruptcies and liquidations." (38 comments)
Unionization drives are heating up across the country following big wins at Starbucks (SBUX) and Amazon (AMZN) since late last year. Apple (AAPL) is the latest S&P 500 company to get its first taste of organized labor in the U.S. following a union win at a store in Towson, Maryland. The vote was 65 to 33 with about 110 employees eligible to cast a ballot, marking a nearly two-to-one margin in favor of the union.
Quotes: "We did it Towson! We won our union vote! Thanks to all who worked so hard and all who supported!" the Machinists Union's Coalition of Organized Retail Employees tweeted on Saturday. "Compensation is important, considering the cost of living in general and inflation, but the bigger thing is having a say," added Christie Pridgen, who has worked at the store for eight years. "That was the most important thing to me."
The National Labor Relations Board still needs to certify the vote in a process that will likely take around a week. Apple would be required to bargain with the union over working conditions following the certification, but it may drag out the process as it shuns negotiations of union labor contracts. Apple's head of Retail and People, Deirdre O'Brien, visited the location in May to discourage the recent drive, saying unions were not committed to company employees and establishing one would make it harder for Apple to respond to worker concerns.
Outlook: The Towson store near Baltimore is a smaller location inside a mall, but other high-traffic Apple stores are entertaining similar moves. "Flagship" shops at the Grand Central Terminal and World Trade Center in New York have signaled unionization efforts, but have yet to conduct an official vote. A store in Atlanta, Georgia, was also scheduled to hold an election earlier this month, but it was delayed after the Communication Workers of America union alleged that Apple intimidated its employees. (158 comments)
WTI crude prices have eased from $120 to $110 a barrel over the past week, while the national average gas price dipped under $5 a gallon, but the cost of energy still remains at elevated levels. Biden administration officials are still scrambling to contain the fallout, with the record prices being one of the biggest contributors to inflation. The White House already turned to the Strategic Petroleum Reserve in March, ordering the release of up to 1M barrels of oil a day for 180 days in the hopes of meeting demand, but its intended effect has been negligible.
Next plan: President Biden is considering the idea of a federal gas tax holiday and "hopes to have a decision based on the data I'm looking for by the end of the week." Any suspension of the 18.4 cents a gallon tax would require action from Congress and would be unprecedented. There has never been a federal gas tax holiday in the history of the U.S., while past breaks on state gas taxes have mostly been limited to a few days.
So far, Democratic-led attempts to temporarily pause collecting the tax have failed to gain traction in Congress. Critics say toil companies could pocket the tax relief without passing the savings on to consumers, or that it only makes up a small fraction of the overall cost of gasoline and goes to fund much-needed road and bridge improvements. Senate Minority Leader Mitch McConnell (R-KY) has also accused Democrats of playing "political games," with the proposed tax relief expiring soon after midterm elections in November.
Go deeper: Biden is planning to visit Saudi Arabia next month to discuss the energy situation, while Treasury Secretary Janet Yellen said talks are ongoing on how the U.S. and its allies could cap the price of Russian oil exports. Yellen also rejected the idea of reviving TC Energy's (NYSE:TRP) Keystone XL oil pipeline project, which was canceled by Biden on his first day in office. "I don't think it's something that even if it were allowed, would take years to come into completion, so I don't see it as a short-term measure to address the current situation," Yellen told reporters in Toronto. "And longer term, we remain committed to our climate change objectives. But, you know, it's really up to the president to consider." (38 comments)
Today's Markets
In Asia, Japan +1.8%. Hong Kong +1.9%. China -0.3%. India +1.9%.
In Europe, at midday, London +1%. Paris +1.5%. Frankfurt +1.9%.
Futures at 6:20, Dow +1.7%. S&P +1.9%. Nasdaq +2%. Crude +2.3% to $110.44. Gold flat at $1840.50. Bitcoin +2.9% to $21,168.
Ten-year Treasury Yield +4 bps to 3.28%
Today's Economic Calendar
8:30 Chicago Fed National Activity Index
10:00 Existing Home Sales
11:00 Fed's Barkin: “Monetary Policy & Inflation Webinar Series”
3:30 PM Fed's Barkin Speech