Monday Morning Reads
- Cascade of Calamities’
- The Inflation Scare Is Over
- No Commodities ‘Super-Cycle’
- After M&A Boom via Zoom
- Deutsche Bank’s Nightmare Decade Is Gone
- Fine Social Media Companies
- Apple’s Fortnite Trial Ends
- Amazon Nears Deal
- The Curious World of NFT Real Estate and Design
- Crypto, Crypto, Crypto
- Crypto Markets
Building on the solid gains seen in the previous session, U.S. stock index futures are pointing higher, as a broad rally takes hold ranging from beaten-down tech shares to reopening plays. Nasdaq futures are ahead by 0.6%, while contracts linked to the Dow and S&P 500 tacked on another 0.3% overnight. Helping sentiment is the lowest level of U.S. COVID-19 cases since June 2020 as Americans look toward Memorial Day and traveling this summer.
Fed talk: Lael Brainard, Raphael Bostic and James Bullard all said Monday that they wouldn't be surprised if prices rise in the coming months, but reiterated that most of those gains should be temporary. "Monday's lethargy seems to have been shaken off after a chorus of Fed voices delivered dovish statements, downplaying arguments for early tightening," said Nema Ramkhelawan-Bhana, an analyst at Rand Merchant Bank. "Let's not forget that it only takes one inflation print to unsettle investors or a strong economic figure to guide nominal yields higher. And so the lesson is to make hay while the sun shines."
Bitcoin's (BTC-USD) recent rout also seems to have stabilized, with the crypto back near the $40,000 level after crashing to below $32,000 on Sunday. Nearly all of the other major cryptocurrencies are also higher. On Monday, Elon Musk tweeted that North American Bitcoin miners had committed to publishing data on their current and planned renewable energy usage, helping to alleviate some concerns over Bitcoin's impact on the environment.
Economic calendar: While earnings season is winding down, investors will get results today from AutoZone (AZO), Nordstrom (JWN), Toll Brothers (TOL) and Urban Outfitters (URBN). Housing data will also be reported this morning, including the Case-Shiller Home Price Index, FHFA House Price Index and New Home Sales, while consumer confidence figures will offer some insight into current business and employment conditions.
Top Japanese officials do not expect a new U.S. travel advisory to affect the Tokyo Olympics, which has already been postponed by a year due to the coronavirus pandemic. Olympic Minister Tamayo Marukawa even noted the guidance did not affect essential travel after the State Department raised Japan's status to "Level 4: Do Not Travel." Any decisions surrounding the Games would have to be made quickly, as the event is only two months away (starting July 23).
Bigger picture: Opposition is deepening in Japan. A mid-May poll by the Asahi newspaper found that 83% of people wanted the Olympics to be canceled or postponed, up from 69% in April, while the business community is also coming out against the event. SoftBank (OTCPK:SFTBF) CEO Masayoshi Son sees a situation where athletes and officials trigger a new wave of infections, while Rakuten (OTCPK:RKUNF) boss Hiroshi Mikitani has called the Olympics a "suicide mission."
While Japan has dodged the large-scale COVID-19 infections seen in many other nations, a fourth wave has triggered states of emergency in Tokyo and other localities. Hospitals in Osaka, Japan's second-largest city, are even nearing their breaking point as a slow vaccination campaign has added to coronavirus concerns. The country has delivered vaccinations to just under 5% of its population, the slowest among the world's richer countries.
By the numbers: While international spectators are prohibited from entering Japan to attend the Olympics, a decision hasn't yet been made on domestic viewers. The ban on overseas audiences will slash the economic boost from the Games by ¥151.1B ($1.39B), but a full cancellation would mean a lost stimulus of ¥1.8T, or 0.33% of GDP, according to the Nomura Research Institute.
Square (NYSE:SQ) shares closed up 5.5% on Monday following reports that the company will offer checking and savings accounts to small business customers. The plan appears to have been found in hidden code in an update to Square's app for Apple's iPhone and iPad, according to Bloomberg, though it's not yet clear when the new products will debut.
From the SA comments section: "Just another good way to expand the eco-system. With 2 million merchants accepting Square and 30 million customers, the key is to attract more people on both ends," wrote Bill Stevenson. "SQ is just going to keep innovating. Tough company to bet against," adds premium subscriber Rleaton.
Square disrupted the world of finance when it first revealed its card readers in 2010 that offered to process payments at one easy-to-understand price. By adding checking and savings accounts, Square is taking even more direct aim at a business dominated by the Big Banks. It's also planning to offer a 0.5% interest rate for its savings account through 2021, a rate similar to other online offerings.
Timeline: Square's industrial bank, Square Financial Services, was officially started in early March. Square's industrial loan bank charter was conditionally approved by the FDIC in March 2020. (10 comments)
Bank of America (BAC) is prohibiting trainee brokers at its Merrill Lynch Wealth Management unit from making cold calls to push the latest hot stock, as the firm shifts to more modern methods for bringing in new clients, WSJ reports. Instead, its new adviser-training program will urge them to use internal referrals or LinkedIn messages for finding new clients.
Quote: "We are leaning much more heavily on leads and referrals from the broader company," Merrill President Andy Sieg said back in April. "There is also an opportunity to be much more modern in terms of the way we are reaching out to prospective clients."
Different era? While cold-calling affords the opportunity for financial advisors and the like to build a network from scratch, many people today are not answering unknown numbers. While personal referrals lead to a response around 40% of the time, less than 2% of people who are cold called even answer the phone, according to Merrill executives. FA trainees will also get more referrals from the BofA’s pool of 66M retail customers. (28 comments)
Western nations are debating what kind of sanctions to impose on Belarus after President Alexander Lukashenko forced down a Ryanair (NASDAQ:RYAAY) commercial aircraft on Sunday as it was passing through the country's airspace. Local authorities say they ordered a MiG-29 to escort the aircraft after receiving information about explosives on board, though a dissident journalist named Roman Protasevich was subsequently arrested and terror group Hamas denied it had sent the reported bomb threat. Ryanair CEO Michael O'Leary said he also believed members of Belarus's secret service were aboard the plane. Belarus government bonds tumbled on the news, hitting the lows last seen during 2020's disputed election and ensuing political crisis.
Sanctions: EU leaders have barred Belarusian airlines from entering the bloc's airspace and airports and urged EU-based carriers to avoid flying over the former Soviet republic. They additionally agreed to widen the number of Belarusian individuals registered on an existing sanctions blacklist, as well as adopt a set of punitive measures that would target companies and entire sectors of the economy. Meanwhile, neighboring Lithuania said it would ban flights to and from Minsk, while Poland proposed all flights between the EU and the country be halted.
"I welcome the news that the European Union has called for targeted economic sanctions and other measures, and have asked my team to develop appropriate options to hold accountable those responsible, in close coordination with the European Union, other allies and partners, and international organizations," President Biden said in a statement.
Outlook: Since the Belarus presidential elections last summer - which most Western countries considered fraudulent - the EU has imposed three rounds of sanctions that targeted government officials, business leaders and entities. Russia has meanwhile backed Belarus's handling of the current situation and Foreign Minister Sergei Lavrov said Minsk's explanation was "reasonable." Belarus was a member of the former Soviet Union, but it's still connected to Russia via linguistic, cultural and trade ties.
What else is happening...
Authentic Brands is said to be exploring potential IPO this year.
Solar power story of rapidly declining costs 'thrown into reverse.'
Nat gas posts fifth straight loss on milder weather outlook.
Monday's Key Earnings
In Asia, Japan +0.7%. Hong Kong +1.8%. China +2.4%. India flat.
In Europe, at midday, London flat. Paris +0.1%. Frankfurt +0.8%.
Futures at 6:20, Dow +0.6%. S&P +0.3%. Nasdaq +0.3%. Crude -0.7% to $65.61. Gold flat at $1884.40. Bitcoin +3.8% to $37768.
Ten-year Treasury Yield -1 bps to 1.59%
Today's Economic Calendar
8:55 Redbook Chain Store Sales
9:00 S&P Corelogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 New Home Sales
10:00 Consumer Confidence
10:00 Fed's Quarles Testifies on Supervision and Regulation of Financial System
10:00 Richmond Fed Mfg.
1:00 PM Results of $60B, 2-Year Note Auction
1:00 PM Money Supply