Monday Morning Reads
- Sustaining Price Rally
- How China Won
- Value Stocks Surge Boosts 2020’s Losers
- Jabs Equal Jobs?
- Wall Street Visionaries
- An Urgent Reckoning
- Fringe Groups Splinter
- ‘An Epiphany Moment’
- Walmart Creates Fintech Partnership
- Roth or a Traditional IRA?
Pausing all political spending: American Airlines (NASDAQ:AAL), Archer Daniels Midland (NYSE:ADM), BlackRock (NYSE:BLK), Boston Scientific (NYSE:BSX), BP (NYSE:BP), Charles Schwab (NYSE:SCHW), ConocoPhillips (NYSE:COP), Facebook (NASDAQ:FB), Google (GOOG, GOOGL), Kroger (NYSE:KR), Marathon Oil (NYSE:MRO), Microsoft (NASDAQ:MSFT), Union Pacific (NYSE:UNP), U.S. Bancorp (NYSE:USB) and UPS (NYSE:UPS).
Suspending donations to Republicans who objected to electoral votes: Airbnb (NASDAQ:ABNB), Amazon (NASDAQ:AMZN), American Express (NYSE:AXP), AT&T (NYSE:T), Comcast (NASDAQ:CMCSA), Dow Inc. (NYSE:DOW), General Electric (NYSE:GE), Mastercard (NYSE:MA) and Verizon (NYSE:VZ).
Some statistics: In the 2020 election, Republican candidates and committees received a total of $205M in campaign donations from corporate PACs, according to the Center for Responsive Politics, while Democratic candidates and causes received $155M.
Thought bubble: This is not the period in the political cycle when candidates are out raising money. Since most PACs donate closer to presidential and legislative votes, it'll be interesting to see how much lasting pain Corporate America will inflict as the midterm elections approach in November 2022. (77 comments)
Equities took a breather on Monday following a rally that took major U.S. indexes to record highs, though the pullback does not seem to be lasting long, as futures look to start today's session on the right foot. Dow +0.3%; S&P 500 +0.3%; Nasdaq +0.5%.
Quote: "This market refuses to traffic in everything that's going wrong and instead focuses on what could go right," Jim Cramer declared, adding that the positivity on Wall Street could also be seen in the way that numerous individual stocks exchanged hands.
Despite the Sriwijaya Air crash, Boeing (BA) shares finished well off their session lows after a Baird analyst in a new note called it a "top cyclical play on recovery," while Tesla (TSLA) is up nearly 3% premarket after its first negative day in 12. Social media stocks also plunged Monday after banning President Trump from their platforms, but are all heading into the green this morning. The selloff in Bitcoin, which was down nearly 25% at one point, appears to have stabilized (for the time being), up 1% to the $36,000-level.
Outlook: Investors have largely ignored last week's attack on the Capitol, Democrats' move to impeach President Trump and countless headlines that have flashed "market bubble" warnings. Traders are also paying close attention to forecasts and corporate views of the economy as earnings season kicks off this week. Earnings for S&P 500 companies overall are expected to jump about 24% in 2021, according to data from Refinitiv, which includes strong rebounds for sectors like industrials, materials and financials. (8 comments)
"Given the violent events in Washington, DC, and increased risk of harm, we began permanently suspending thousands of accounts that were primarily dedicated to sharing QAnon content on Friday afternoon," Twitter (NYSE:TWTR) confirmed in a blog post. "We've been clear that we will take strong enforcement action on behavior that has the potential to lead to offline harm."
Statistics: "Since Friday, more than 70,000 accounts have been suspended as a result of our efforts, with many instances of a single individual operating numerous accounts. These accounts were engaged in sharing harmful QAnon-associated content at scale and were primarily dedicated to the propagation of this conspiracy theory across the service."
Citing its Coordinating Harm policy, Facebook (NASDAQ:FB) also announced it will remove content containing the phrase "stop the steal" from its services in the lead-up to President-elect Joe Biden's inauguration on Jan. 20, but will allow "robust conversations related to the election outcome to continue."
Go deeper: Parler has filed a lawsuit against Amazon (NASDAQ:AMZN), accusing the tech giant of violating antitrust law after it suspended web hosting of the "free speech" microblogging platform. In a complaint filed in federal court in Washington state, Parler said the decision was "motivated by political animus" and designed to reduce competition to the benefit of Twitter, which is also an AWS customer. Parler is asking for an emergency order to reject Amazon's shutdown, saying it was the equivalent of "pulling the plug on a hospital patient on life support" and "will kill Parler's business - at the very time it is set to skyrocket." (24 comments)
Cue the tweet from Elon Musk... Five days ago, the tech billionaire and avid Twitter (TWTR) user prompted his followers to "use Signal" - the encrypted messaging app that's funded by a nonprofit and is seeing a surge in popularity. A recent policy change at WhatsApp saw the Facebook (FB) unit expand control over the user data it collects, while Signal has a history of fighting any entity that asks for information and adds features to further anonymize users where possible.
What happened? There was some confusion (and maybe a bit of stock gambling). Traders responded to Musk's tweet by pushing up the price of Signal Advance (OTCPK:SIGL), a small component manufacturer whose stock trades over the counter and hasn't filed an annual report with the SEC since 2019. Shares were trading at just $0.60 before the big tweet, but quickly climbed to $6.64 over Thursday and Friday. The stock shot up again yesterday to close at $38.70, resulting in a whopping 6,380% advance over the three trading sessions, as well as a market cap of more than $3B.
Flashback: A similar occurrence happened last year. The rising popularity of trendy video-calling service Zoom Video (NASDAQ:ZM) saw a sharp rise in the stock price of Zoom Technologies, which traded under "ZOOM." The SEC later suspended trading of the wireless product distributor, partly because of the widespread confusion.
Fat-finger errors in the financial markets traditionally took place when an order to buy or sell was placed of far greater size than intended or other input errors. Traders may now be looking at similar style discrepancies when it comes to company names or ticker symbols. (74 comments)
Days after Sriwijaya Air Flight SJ182 went down in the Java Sea, Indonesian Navy divers have recovered one of the black boxes from the Boeing (NYSE:BA) 737-500 airliner. As crash investigators await the second recording device, a common question is once again surfacing: Why don't airlines stream their communications data?
Some history: Black boxes have been on planes since the late 1950s, and now every commercial aircraft has two: A flight data recorder that typically collects information like basic speed and altitude, and a cockpit voice recorder that captures sounds and conversations. They are housed in a metal shell built to withstand extreme temperatures and pressure, and although they are referred to as black boxes, they are typically orange in color, making them easier to spot in murky or deep waters. While each box contains a beacon, the unit has only enough battery power to transmit a "ping" for 30 days.
Still, in our big data and cloud storage era, when smartphones can receive real-time traffic updates and NASA can monitor rovers on Mars, why aren't commercial airliners tracked in real-time or their black box data streamed back to the ground?
1) Reliable inflight internet is still only in a small geographic subset of the world and the sheer amount of data collected by flight recorders is immense, meaning satellite time and storage would be very expensive. While there are some black box streaming services, they generally don't send data continuously to ground-based computers, but rather activate in the event of an abnormal occurrence, and quickly send a torrent of data to the airline for analysis.
2) It's not easy to retrofit new equipment to old aircraft from Boeing, Airbus (OTCPK:EADSY) and others, which are designed to be extremely precise. The aviation sector is also an extremely "long-cycle" industry, where things change very slowly.
3) There's no regulatory requirement mandating live black box data on new aircraft models, and any changes would be slow and complicated. The NTSB has been recommending the use of video recording in cockpits for the past two decades, but pilots' unions have fought against the efforts due to privacy reasons. They have also balked at the idea of making their voice recordings available to anyone beyond accident investigators. (40 comments)
What else is happening...
Crypto marketplace Bakkt to go public via SPAC deal.
BofA says chip picks ready to take off: 'Let's get cyclical.'
In Asia, Japan +0.1%. Hong Kong +1.3%. China +2.2%. India +0.5%.
In Europe, at midday, London -0.7%. Paris -0.2%. Frankfurt flat.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.5%. Crude +1.4% to $52.98. Gold +0.6% at $1861.70. Bitcoin +1.2% to $35961.
Ten-year Treasury Yield +2 bps to 1.16%
Today's Economic Calendar
6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
9:30 Fed's Bostic: "Economic Recovery and Addressing Inequality"
9:35 Fed's Brainard: "Artificial Intelligence and Financial Services"
10:00 Job Openings and Labor Turnover Survey
11:00 Fed's Kaplan: "Racism and the Economy: Focus on Education"
11:00 Fed's Bostic: "Racism and the Economy: Focus on Education"
12:00 PM Fed's Mester Speech
1:00 PM Fed's George Speech