Tuesday Morning Reads
- Bigger Than Ford and Kraft
- A Global Tipping Point
- U.S. Readies Small-Business Grants
- Oil Prices Went Negative A Year Ago
- Tobacco Stocks Drop
- Still Dirt Cheap
- Some Things Money Can’t Buy Super League Fight
- What Makes A Happy Country?
- The Most Annoying Bull Market of All-Time
- The Craziest Market I’ve Ever Seen
- Watching Developing Financial Markets
Tobacco stocks like Altria (MO) and Philip Morris (PM) are continuing to sell off premarket amid reports of new regulatory efforts by the Biden administration. Under consideration is requiring tobacco companies to lower the nicotine levels of all cigarettes sold in the U.S. to a level at which they are no longer classified as addictive. The move comes as administration officials approach another deadline on whether or not to ban menthol cigarettes.
Bigger picture: The FDA must respond in court by April 29 to a citizen's petition to ban menthols by disclosing whether the agency intends to pursue such a policy. The Biden administration is weighing whether to move forward on a menthol ban or a nicotine reduction in all cigarettes - or both. The moves are intended to push smokers to either quit or switch to lower-nicotine alternatives such as nicotine gums, lozenges or e-cigarettes, as well as targeting smoking in younger people.
"Any action that the FDA takes must be based on science and evidence and must consider the real-world consequences of such actions, including the growth of an illicit market and the impact on hundreds of thousands of jobs from the farm to local stores across the country," an Altria spokesman said in response to the deliberations.
Go deeper: Both policies would take years to implement and would likely face a long stretch of legal challenges, but they add to recent government efforts to curb smoking across the globe. New Zealand last week proposed sharply reducing nicotine levels in cigarettes and gradually raising the legal smoking age. A "smoke-free generation policy" could also ban smoking for anyone born after 2004 in a bid to make the country smoke-free by 2025.
While tobacco is out of favor, marijuana is making big inroads. More on International Weed Day below...
Stock index futures are wobbling once again, all down 0.5%, ahead of a big day of earnings from several blue-chip companies. The reports and the outlooks will determine whether recent stock valuations are justified and could provide a forecast of what things will look like for the rest of the year. "The only risk is that expectations across the board are so high, they are going to be very difficult to meet," explained Seema Shah, chief strategist at Principal Global Investors. "We are getting into territory - both with earnings and economic data - where it will be very difficult to have positive surprises."
Who is reporting today? Johnson & Johnson (JNJ) is up this morning, and it will likely provide more clarity into its paused vaccine rollout, while defense spending will be analyzed following results from Lockheed Martin (LMT). Other data will provide clues about how the pandemic is still shaping demand. Shares of Procter & Gamble (PG) and Netflix (NFLX) have soared over the past year due to the necessity of home care/cleaning products, as well as stay-at-home entertainment, but we'll see whether those trends continue as the companies publish their results.
Who already reported? The big banks announced bumper results last week and investors got some more marks on Monday. Coca-Cola (KO) rose after an organic sales beat, while Harley-Davidson (HOG) climbed nearly 10% after topping expectations and a guidance lift. After the bell, United Airlines (UAL) slipped 2% on its fifth straight quarterly loss, while IBM (IBM) rose 3% after returning to revenue growth via cloud strength.
Also on tap for today: It's 4/20. While there was some pot news - the U.S. House approved a cannabis banking bill - Dogecoin (DOGE-USD) fans are attempting to turn the celebrations into "Doge Day." Supporters are hoping to see the crypto hit $1, just one week after it was valued at just $0.09 (it has been valued at half a cent for most of its seven-year history). The coin, which started as a meme currency, already hit some milestones that didn't seem possible, and at $0.40, its market value has already topped $50B. That makes Dogecoin larger than even some blue-chip companies, which are set to report earnings this week.
Global carbon emissions are on track to jump 4.8% this year, according to the IEA, marking the biggest annual gain since 2010's record-setting increase, when the world was bouncing back from the global economic crisis. A similar situation is occurring now. While the coronavirus pandemic shut many of the world's largest economies, sending demand for CO2-emitting fuels into the dumpster, recent economic reopenings are changing the energy landscape.
Quote: "This is a dire warning that the economic recovery from the Covid crisis is currently anything but sustainable for our climate,” said Fatih Birol, executive director of the IEA. "Unless governments around the world move rapidly to start cutting emissions, we are likely to face an even worse situation in 2022."
The report comes as policymakers are under pressure to deliver on promises made as part of the Paris Agreement. The latest report card from the United Nations showed that 75 signatories to the accord - responsible for a third of global emissions - "fell far short" of what is needed to meet the deal's goals. If those targets were implemented, their combined emissions would fall just 0.5% by 2030 (compared to 2010 levels), which is far lower than the 45% fall in global emissions needed to limit warming to 1.5C.
Go deeper: While the U.S. consumed more renewable energy than coal last year - for the first time since the 1880s - and as Europe's coal-fired electricity generation "is disappearing or becoming negligible," attention is turning elsewhere to meet the Paris climate accord. The agreement treats China, the world's second-largest economy, as a developing nation, granting it more time to lower its emissions. President Biden already dispatched climate envoy John Kerry to China this week, where the two sides discussed the possibility of enhancing Beijing's climate commitments (the country alone will account for more than 50% of 2021's new coal use). Biden will also hold a virtual summit on Friday to discuss climate objectives with dozens of world leaders, before global talks are held in Scotland in early November.
Apple (AAPL) is allowing Parler to return to its App Store after banning the conservative social media app following the storming of the U.S. Capitol on January 6. Users had talked about violence on the platform in the days leading up to the attack, including calls to assassinate former Vice President Mike Pence. Apple says it is now satisfied with Parler's proposed moderation policies, and the app will become available once it releases the updates.
Bigger picture: It's not yet clear what Parler has agreed to, or how the conservative platform will be moderated, though it previously branded itself as a "free speech" alternative. That meant leaving virtually all moderation decisions up to individuals, collecting almost no user data and excluding content-recommendation algorithms (it shows users all the posts from everyone they follow, in reverse chronological order). Regarding the new changes, interim Parler CEO Mark Meckler said the company had "worked to put in place systems that will better detect unlawful speech and allow users to filter content undesirable to them, while maintaining our strict prohibition against content moderation based on viewpoint."
Following the attack on The Capitol, Google (GOOG, GOOGL) also removed Parler from its Play Store, while Amazon (AMZN) dropped Parler from its Web hosting service. Parler's suit against Amazon has so far fared poorly in court (private firms aren't subject to the First Amendment), while Google has continued to bar Parler from its Play Store. Users can still install the app directly on Android, making the ban far less of a liability.
Outlook: Back in February, Parler said its service had grown to over 20M users (vs. 192M DAUs on Twitter) and would be hosted by SkySilk Inc., which operates out of a Los Angeles area data center. But many that had previously emigrated to the platform continued to post on Twitter (NYSE:TWTR), raising questions of whether Parler will eventually fizzle, complement or replace larger platforms with much bigger audiences. Republican mega donor Rebecca Mercer has also emerged in recent months as Parler's shadow executive after bankrolling the company after founder John Matze was ousted as CEO.
NASA's Ingenuity helicopter lifted off from the dusty red surface of Mars on Monday, making history with the first powered, controlled flight on another planet. Altimeter data showed the drone climbed to its prescribed maximum altitude of 10 feet and maintained a stable hover for 30 seconds. It then descended, touching back down on the surface of Mars after logging a total of 39.1 seconds of flight.
Fun facts: The helicopter's twin rotor blades needed to spin at 2,500 revolutions per minute, five times faster than on Earth, due to the thin Martian atmosphere. NASA also hailed the accomplishment as a Wright Brothers moment, with the 4-pound copter even carrying a bit of wing fabric from the Wright Flyer that made similar history at Kitty Hawk, North Carolina, in 1903. That flight lasted 12 seconds.
Ingenuity's initial flight demonstration was autonomous - piloted by onboard guidance, navigation and control systems running algorithms. It couldn't be flown with a joystick because the data must be sent to and returned from the Red Planet over hundreds of millions of miles via orbiting satellites and NASA's Deep Space Network. The project was led by operators at NASA's Jet Propulsion Laboratory, while other contributors included AeroVironment (AVAV).
Go deeper: NASA's Perseverance rover touched down with Ingenuity on Feb. 18 and was deployed to the surface of the Jezero Crater on April 3. Over the next three sols, or Martian days, the helicopter team will receive and analyze all data and imagery from the test, and formulate a plan for the second experimental test flight, scheduled for no earlier than April 22. If the helicopter survives the second flight test, the Ingenuity team will consider how to scout interesting targets and expand the flight profile.
What else is happening...
Oprah Winfrey-backed oat-milk brand Oatly files for IPO.
In Asia, Japan -2%. Hong Kong flat. China -0.1%. India -0.5%.
In Europe, at midday, London -1%. Paris -1.3%. Frankfurt -0.6%.
Futures at 6:20, Dow -0.5%. S&P -0.5%. Nasdaq -0.5%. Crude +0.9% to $64.01. Gold flat at $1769.90. Bitcoin +0.2% to $56153.
Ten-year Treasury Yield unchanged at 1.59%
Today's Economic Calendar