Tuesday Morning Reads
- Boom Technology Is Now a Unicorn
- Hedge Funds Are Highly Invested in Stocks
- Amazon, TikTok, Facebook, Others Ordered
- Google Dominates
- Tech Companies Shift Their Posture
- Feeling Like A Fraud At Work
- They’re Dying of ‘Overwork’
- The 5 Phases of a Bubble
- The Most Powerful Motivator
Businesses and residents are continuing to flee large American cities in droves. A plethora of new taxes and regulatory schemes, surging poverty and violent crime, and a nightlife and culture brought to a near halt by the coronavirus crisis have sped up the exodus, while the pandemic exacerbated a shift towards remote work as a whole. In fact, New York lost at least 300K residents this year, followed by substantial population losses in San Francisco, Los Angeles, Chicago and D.C. Most have overwhelmingly relocated to the Sun Belt or the West outside of California, and Wall Street is taking notice. "I suspect Florida will soon rival New York as a finance hub, due in part to the 'Tax and Spend' policies of New York," said Leon Cooperman, the billionaire former hedge fund manager and CEO of Goldman Sachs Asset Management which fled to Boca Raton.
Not only is Oracle (NYSE:ORCL) relocating its headquarters from California to Texas, but co-founder Larry Ellison is moving his primary residence to Hawaii, becoming the latest Silicon Valley executive to depart the state where they built their fortunes. "I'll be using the power of Zoom to work from the island of Lanai," he wrote in an email. The announcement comes just days after Tesla's (NASDAQ:TSLA) Elon Musk, a close associate of Ellison's, confirmed that he had moved to Texas, after expressing displeasure with California's regulatory environment. Hewlett Packard Enterprise (NYSE:HPE) also recently relocated its headquarters from San Jose, California, to Houston, Texas, while Palantir (NYSE:PLTR) moved its HQ to Denver from Palo Alto. (13 comments)
The stay-at-home trade returned to Wall Street on Monday as NYC Mayor Bill de Blasio warned about a potential "full shutdown" that would see the city join California and Michigan in reinstating business restrictions in the hopes of slowing COVID-19. U.S. futures are now pressing higher, with the Dow and S&P 500 advancing 0.6% and Nasdaq up 0.4%, following stimulus headlines out of Washington. A bipartisan group of lawmakers put forward another economic relief package on Monday evening, which would split a previously proposed $908B package into two parts. A first bill of $748B would avoid the thorniest issues holding up a deal by focusing on spending programs that are favored by both Democrats and Republicans, while a second $160B measure would be for state and local aid.
The Electoral College on Monday formalized Joe Biden's victory in last month's presidential election, as meetings in state capitals nationwide affirmed the Democrat had scored the more than 270 votes needed to take office. Courts have repeatedly rejected lawsuits by the Trump campaign, which have alleged massive fraud, ballot harvesting, illegal votes, election machine manipulation, and fake ballots and tallies, to overturn the election results. Attorney General William Barr, who submitted his resignation on Monday, has also said the Justice Department hasn't found evidence of widespread voter fraud. The Electoral College votes will be formally tallied at a joint session of Congress early next month, and Biden's inauguration is set for January 20.
Tech giants that the EU deems "gatekeepers" could face fines worth up to 10% of annual revenue if they fail to follow antitrust obligations, including not unfairly favoring their own services over competitors. While the draft regulations by the bloc are likely to be revised as they pass through the European decision-making process, the rules signal the direction of travel for regulation of the major internet companies, which are already facing tougher antitrust scrutiny in the U.S. In fact, the Federal Trade Commission is launching a broad inquiry into privacy and data collection practices at Big Tech firms, according to Axios. (32 comments)
A coronavirus vaccine from Moderna (NASDAQ:MRNA) may shortly join a jab from Pfizer (NYSE:PFE) in being distributed across the country, with the FDA to decide on emergency use as early as Friday. As soon as it gets the green light, the federal government plans to ship just under 6M initial doses, which is more than double the 2.9M shipped by Pfizer this week. Distribution will also be more widespread. Medical supply company McKesson (NYSE:MCK) will obtain the doses from Moderna for packaging and distribution to 3,285 sites nationwide, five times more than those receiving the Pfizer vaccine, while FedEx (NYSE:FDX) and UPS (NYSE:UPS) will still be responsible for sending the doses to their final locations. Many states are also working with CVS Health (NYSE:CVS), Walgreens (NASDAQ:WBA) and other local pharmacies to expand the availability of vaccines to rural areas and other places by the spring.
Following OPEC in cutting its forecast for oil demand growth in 2021, the IEA also expects a slower rebound than initially anticipated as the aviation sector takes longer to recover from the pandemic amid border closures and travel restrictions. "It is possible that, after the upcoming holiday season, a third wave of the virus will affect Europe and other parts of the world before vaccines have time to take effect. It will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand." While the "market remains fragile," global consumption is expected to be 96.9M barrels per day next year, about 200K bpd below earlier forecasts. However, the IEA still expects that the crude glut left behind by the pandemic will clear by the end of next year as the global economy recovers and OPEC+ keeps a tight rein on supplies.
"In history books, the year 2020 will forever be known for the deadly pandemic. But from a capital markets perspective, this year will undoubtedly be known as the year of the SPAC," Goldman Sachs wrote in a fresh research note. That means the next two years are likely to see the ripple effect of this method of capital raising, and could result in $300B in M&A in 2021–22. Why the two year horizon? Special-purpose acquisition companies, or SPACs, are publicly traded shell companies formed to merge or acquire another company (instead of an IPO or direct listing), but need to complete an acquisition within two years or the capital raised must be returned to investors. SPACs have raised a record $70B via 206 offerings this year, a fivefold increase from 2019's record SPAC tally.
Hackers were found to have inserted malicious code into software updates provided by SolarWinds (NYSE:SWI), which services hundreds of thousands of organizations around the world, leading the stock to record a nearly 17% plunge on Monday. The U.S. Commerce Department and Department of Homeland Security confirmed that they were infiltrated, as well as a suggestion that the Treasury Department was hit, but that has not yet been established. What we do know so far: Systems were exposed for as many as nine months, with hackers reading emails and moving around undetected. "SolarWinds currently believes the actual number of customers that may have had an installation of the Orion products that contained this vulnerability to be fewer than 18,000," according to the company, and while a fix is in the works, at this stage it may be a case of too little too late. Western security experts have also suggested that the hack bears the hallmarks of an espionage operation, with Russia and China key suspects since it was a highly sophisticated attack.
What else is happening...
In Asia, Japan -0.2%. Hong Kong -0.7%. China -0.1%. India flat.
In Europe, at midday, London -0.3%. Paris +0.4%. Frankfurt +0.7%.
Futures at 6:20, Dow +0.6%. S&P +0.6%. Nasdaq +0.4%. Crude +0.2% to $47.08. Gold +0.9% at $1848.70. Bitcoin +1.1% to $19332.
Ten-year Treasury Yield flat at 0.90%