Wednesday Morning Reads
- 2020 Coming to a Close
- Delaying Goods Bound For Retailers, Automakers
- Pound’s Brexit Jolt
- Keep Risk Rally Going in 2021
- China-E.U. Talks Hit Another Snag
- The Tech That Was Fixed in 2020
- How China Lost Patience With Jack Ma
- Reform Has Little Guys Nervous
- Walmart Sued
- Running Out of Time Before Running Out of Money
- Investing In Stocks At All-Time Highs
Thought the latest edition of coronavirus stimulus was a done deal? Guess again. In a surprise video announcement, President Trump called the $892B package a "disgrace" and demanded changes to the bipartisan legislation approved by Congress. Futures wobbled shortly after the broadcast, but it didn't take much for them to erase the losses. Trump specifically took aim at funding headed overseas, and direct payments to individuals and families, but it was unclear if the items would be enough for him to veto the relief package. Bigger picture: The House and Senate could vote to override Trump's decision as the bill passed with a veto-proof majority in Congress, but the process could delay Treasury Secretary Steve Mnuchin's promise that stimulus checks could begin reaching American households next week. "I am asking Congress to amend this bill and increase the ridiculously low $600 to $2,000, or $4,000 for a couple," Trump declared. "I'm also asking Congress to immediately get rid of the wasteful and unnecessary items from this legislation." In a rare twist, Nancy Pelosi agreed with the call on larger direct payments, and House Democrats will see if they can approve a measure by unanimous consent on Christmas Eve, but it's not clear whether the larger sums would pass muster in the Senate. Meanwhile, U.S. government operations are being funded on a temporary basis through Dec. 28, waiting for the $1.4T in federal spending for fiscal 2021 that is also attached to the stimulus bill.
Brexit trade talks are said to be hanging in the balance once again as officials try to wrap up negotiations today, with the U.K. only a week away from leaving the single market. Discussions are still hung up over fishing rights, though the other two issues, a competitive playing field and enforcement of a deal, seem to have been resolved. Meanwhile, France is reopening its borders with the U.K. for truck drivers who test negative for COVID-19 following a two-day shutdown caused by the new coronavirus variant in England. Some U.K. officials are even speculating that France closed its borders to give a taste of what would happen if there was a no-deal Brexit.
It might be a good idea to own a bit of both Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) in your portfolio, with reports of the companies going head-to-head in the self-driving, EV and battery markets. If Robinhood is any guide, the shares are also among the most widely held stocks on the platform. "During the darkest days of the Model 3 program, I reached out to Tim Cook to discuss the possibility of Apple acquiring Tesla (for 1/10 of our current value). He refused to take the meeting," Elon Musk detailed on Twitter. It's an interesting sidenote to Apple potentially becoming a direct competitor with Tesla, while its long flirtation with the car business is dividing analysts on Wall Street. (344 comments)
The videogame industry has boomed in recent years and the trend is only likely to grow after the release of next-gen gaming consoles from Playstation (NYSE:SNE) and Xbox (NASDAQ:MSFT). In fact, global videogame revenue is expected to soar 20% to $179.7B in 2020, according to IDC data. That's more than the combined annual sales of the film industry ($100B) and the global sports sector ($75B). Bigger picture: With the rise of streaming game services, mobile gaming and cross-platform games, titles aren't limited to a specific console, while digital sales and in-app purchases are padding companies' bottom line. Hours of gameplay have also increased to an average of 14 hours a week since COVID-19 was declared a pandemic in March, compared with an average of 12 hours a week from a year ago. Related: Activision Blizzard (NASDAQ:ATVI), Electronic Arts (NASDAQ:EA), Take-Two Interactive (NASDAQ:TTWO), Zynga (NASDAQ:ZNGA), Glu Mobile (NASDAQ:GLUU), Tencent (OTCPK:TCEHY) and NetEase (NASDAQ:NTES).
The U.S. Department of Justice has filed a civil lawsuit against Walmart (NYSE:WMT) for its alleged role in the opioid epidemic. The retailer was accused of unlawfully filled prescriptions for painkillers that it should have known did not serve a legitimate medical purpose, as well as pressuring its staff to dispense as many drugs as possible. The DOJ wants Walmart to pay billions of dollars in damages, though the company says the case is "riddled with factual inaccuracies and cherry-picked documents taken out of context." It added that "blaming pharmacists for not second-guessing the very doctors DEA approved to prescribe opioids is a transparent attempt to shift blame." (32 comments)
Pfizer (NYSE:PFE) is close to an agreement with the Trump administration in which the company would bolster the supply of its coronavirus vaccine for the U.S. by at least tens of millions of doses next year, NYT reports. In exchange, the government would invoke the Defense Production Act to give Pfizer better access to roughly nine specialized products it needs to make the jab, which could help the U.S. partly offset a potential vaccine shortage that could leave as many as 110M adult Americans uncovered in H1 2021. Pfizer and partner BioNTech (NASDAQ:BNTX), which already have a contract to supply the government with 100M doses under Operation Warp Speed, as well as rival Moderna (NASDAQ:MRNA), are the only two groups that have won U.S. emergency use authorization for their respective COVID-19 vaccine candidates.
The SEC will allow companies to raise new capital through direct listings, whereby a company floats its shares on a stock exchange, but without hiring banks to underwrite the transaction like in an IPO. "This is a victory for the New York Stock Exchange (NYSE:ICE), which had been seeking to change its rulebook to make the new process available to companies going public," NYSE President Stacey Cunningham said in a statement. Until now, companies have only been allowed to use direct listings to sell existing shares, limiting the process to a small number of cash-rich companies like Palantir (NYSE:PLTR), which went public in September. "The massive pops during recent market debuts have proven the traditional IPO process has only gone downhill," added Bill Gurley, general partner at venture capital firm Benchmark. (6 comments)
Internet holding company IAC (NASDAQ:IAC) rose 14% on Tuesday after deciding to spin off Vimeo, which was once a competitor to YouTube (GOOG, GOOGL), but has since morphed into a video production tools company. The move isn't such a surprise. It's IAC's eleventh spinoff to date, and was speculated to happen after Vimeo raised $150M in new equity last month at a $2.75B valuation. Vimeo has more than 200M users across the globe, with over 3,500 enterprise customers including Amazon (NASDAQ:AMZN), Starbucks (NASDAQ:SBUX) and Rite Aid (NYSE:RAD), as well as 1.5M paying subscribers. Business has been expanding at a rapid rate, with revenue growth of 54% in November, 49% in both October and September, and 43% in August.
What else is happening...
It's official! SEC sues Ripple, while XRP continues decline.
In Asia, Japan +0.3%. Hong Kong +0.9%. China +0.8%. India +1%.
In Europe, at midday, London -0.1%. Paris +0.8%. Frankfurt +0.9%.
Futures at 6:20, Dow +0.3%. S&P +0.4%. Nasdaq +0.2%. Crude +0.1% to $47.07. Gold +0.1% at $1871.40. Bitcoin +3.3% to $23425.
Ten-year Treasury Yield flat at 0.92%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:30 Durable Goods
8:30 Initial Jobless Claims
8:30 Personal Income and Outlays
9:00 FHFA House Price Index
10:00 New Home Sales
10:00 Consumer Sentiment
10:30 EIA Petroleum Inventories
11:30 Results of $24B, 2-Year FRN Auction
12:00 PM EIA Natural Gas Inventory