Wednesday Morning Reads
- It Makes Sense
- Wants to Fix It
- The Small Business Administration’s Gaffes
- Is the Bitcoin Craze Coming for Your 401(k)?
- Central Banks Face New Balancing Act
- Green Finance Hires Political Stars
- Big Tech Battles for Online Talent
- Florida’s New Pro-Disney
- Poorer Than Previous Generations
- The Worst Time to Buy a Home
Half of the adults in the United States, more than 129M people over the age of 18, are now fully vaccinated against the coronavirus, according to new data from the CDC. Nine states - Connecticut, Hawaii, New Hampshire, New Jersey, New Mexico, Maine, Massachusetts, Rhode Island and Vermont - have even inoculated 70% of their adult population with at least one dose. The milestones come nearly two weeks after the CDC relaxed social distancing and mask requirements for the fully vaccinated, paving the way for many states to ease additional restrictions.
By the numbers: Among people in the U.S. aged 65 and up (a demographic that faces far greater health risks), nearly 74% have been fully vaccinated. The entire nation also opened up jabs to anyone over 16 in the middle of April, and the FDA approved the Pfizer-BioNTech (PFE, BNTX) vaccine for anyone over 12 nearly two weeks ago. Nearly 5M of these adolescents have received at least one dose of the vaccine, according to the CDC.
Meanwhile, tensions continue to surface over tracing the origins of the coronavirus pandemic. Washington is calling for a fresh round of investigations to be conducted with independent and international experts, although Beijing considers the probe in its country to be fully complete. Earlier this year, a team of scientists summoned by the WHO spent a month in China, but the group was largely confined to reviewing Chinese state research and some of the members expressed frustration that they weren't given full access to data.
Quotes: "The purpose of the inquiry is not to assign blame, but to be grounded in science, to find the origin of the virus, and the outbreak, and to help us all prevent future global catastrophes from happening," noted Jeremy Konyndyk, executive director for Covid-19 at the U.S. Agency for International Development. While it's more likely the coronavirus jumped from an animal to humans, "we don't know 100% the answer to that," added Dr. Anthony Fauci on Tuesday, saying it was "imperative that we do an investigation." CDC Director Dr. Rochelle Walensky has also acknowledged a "possibility" that COVID-19 spread through an accidental lab leak. (38 comments)
Markets struggled to find direction yesterday, with stocks jumping earlier in the session, but closing just below the flatline. "Low volatility, flat equities, declining U.S. Treasury yields, and low trading volumes - feels a lot like a Tuesday during a pre-holiday week," Goldman Sachs managing director Chris Hussey wrote in a research note. Futures ticked up 0.3% in overnight trade, while Bitcoin (BTC-USD) climbed back above $40,000 after a bout of volatility last week.
There are some pockets of the market that have been outperforming in recent sessions, including travel stocks like airlines and cruise companies, as well as homebuilder shares that keep moving higher. The reopening theme has led to market resilience, while the meme trade has resurfaced, with names like GameStop (GME) and AMC (AMC) posting big gains. Inflation fears appear to be ebbing at the moment as a chorus of Fed officials continue to reassure investors that any price rises will be transitory.
Taper talk: "We're talking about talking about tapering, and that is what you want out of us. You want to be long-viewed here," San Francisco Fed President Mary Daly told CNBC. "Right now, policy is in a very good place. Policy is supporting the American people." Fed Vice Chair Richard Clarida also suggested yesterday that the appropriate timing of scaling back should be discussed at upcoming policy meetings and he may shed more light on the matter this morning. The Fed is currently scooping up $120B in assets per month, but Morgan Stanley thinks the central will start tapering its level of bond buying toward the end of 2021.
On the calendar: Wall Street bank chiefs are in for a grilling today in front of the Senate Banking and House Financial Services committees. Jamie Dimon and Co. are set to highlight their role in the pandemic recovery, but will be challenged over a drop in lending over the past year - especially to disadvantaged communities - as well as the racial diversity of their workforces (see below). Some tech earnings are also scheduled for after the bell, including Nvidia (NVDA), Snowflake (SNOW), Okta (OKTA) and Workday (WDAY).
Following bumper earnings on Wall Street in the first quarter, the heads of the six largest U.S. banks are set to testify before Congress today and tomorrow. The familiar faces: JPMorgan's (NYSE:JPM) Jamie Dimon, BofA's (NYSE:BAC) Brian Moynihan, Morgan Stanley's (NYSE:MS) James Gorman, Citigroup's (NYSE:C) Jane Fraser, Wells Fargo's (NYSE:WFC) Charles Scharf and Goldman Sachs' (NYSE:GS) David Solomon. Questions will target several hot-button social and economic issues, though the group is set to paint a favorable picture of an industry they say has allowed the economy to recover from COVID-19.
Zoom in: The biggest topic at the hearing will center around a decline in loan issuance over the past year to small businesses and consumers. Congressional reports may be cited showing lenders discriminated against some borrowers when distributing pandemic aid, though bankers feel the slowdown was largely attributable to a lack of demand. Expects some of the usual topics as well, including climate change, sustainable investing, diversity, racial justice, wealth inequality, cryptocurrencies and tax policies.
Democrats: "The pandemic exposed several frailties in the economy and financial system, including pervasive racial inequalities, unequal access to traditional banking products and services and unaddressed systemic risks threatening U.S. financial stability,” according to staff for Rep. Maxine Waters of California, who chairs the House Committee on Financial Services.
Republicans: "While the financial system has proven to be remarkably resilient, I worry that increasing political pressure could lead to distorting credit allocation, which would jeopardize our continued prosperity and undermine public policy making in America," said Pennsylvania Sen. Pat Toomey, the top GOP member on the Senate Banking Committee.
Just a week after unveiling its F-150 Lightning to great fanfare, Ford (F) may have some other big announcements coming at today's investor day. Reuters suggests the company is developing two dedicated all-electric vehicle platforms - one for full-size trucks and larger SUVs, as well as another for cars and smaller SUVs. The dedicated systems could position Ford, whose shares are up 2% premarket, to compete better in the future with Tesla (TSLA), Volkswagen (OTCPK:VLKAF) and General Motors (GM).
Bigger picture: Ford's stock price has nearly doubled since CEO Jim Farley took the wheel on Oct. 1. That includes a 12.6% advance last week following the debut of the electric F-150 Lightning. One of the main targets investors also want to see is a long-promised 8% global adjusted profit margin target, including 10% in North America and 6% in Europe, which was promised by previous Ford CEOs, but never materialized.
Ford is projected to invest billions in the new EV platforms that could set it up for large-scale production of electric motors and components. Management is also likely to outline detailed plans for at least nine all-electric cars and SUVs, but will not electrify its entire range, instead choosing to focus on areas "where we are outstanding." Autonomous news? Ford already announced it would spend $7B on self-driving vehicles through 2025, includes investments in Argo AI, so expect some details.
Analyst commentary: "Since Jim Farley has taken over as CEO, Ford has promised increased transparency and measurable [key performance indicators] so we can track Ford’s progress and execution," RBC Capital Markets analyst Joseph Spak said in a research note. "We expect those, along with financial targets, to be detailed at the event." (75 comments)
ExxonMobil (XOM) also holds its annual shareholder meeting today amid a proxy fight against a coalition of activist investors led by Engine No.1. The small hedge fund has proposed eight existing directors and four new green-tinged directors for the board, while ExxonMobil was pushing for its existing 12-director slate until two days ago. Its new plan calls for the appointment of two new directors, one with energy industry experience and one with climate experience, though Engine No.1 urged shareholders "not to let this last-minute tactic influence your vote."
Backdrop: Activists have accused Exxon of not doing enough in response to seismic shifts brought on by climate change. They're also hoping to promote a lower carbon strategy similar to the ones adopted by European oil majors like BP (BP), Royal Dutch Shell (RDS.A, RDS.B) and Total (TOT). The vote looks like it will come down to big fund owners BlackRock (BLK), Vanguard and State Street (STT) - which hold more than 20% of Exxon's stock combined - as well as the company's huge retail investor base, which accounts for nearly half of its outstanding shares.
Last week, proxy advisory firms Glass Lewis and ISS joined a growing list of pension funds and asset managers in supporting at least some of Engine No. 1's board nominees. In big news yesterday, Reuters reported that BlackRock voted for three of Engine No. 1's four candidates to join the company's board.
Analyst commentary: Exxon Mobil is still the "top major idea" among oil producers at Bank of America, which said the company is poised for a relative recovery after several years of lagging performance. The activist campaign "misunderstands the history, strategy, flexibility and outlook of the company," writes analyst Doug Leggate, as Exxon is "the only major to emerge with absolute growth, margin expansion and capacity for dividend growth intact from an organic portfolio," in contrast with some peers that failed on those fronts during the worst oil downturn in a generation. BofA rates shares at Buy, with a $90 price target. (97 comments)
What else is happening...
U.S. home prices surge by double-digit percentages.
In blow to U.S. miners, President Biden to look abroad for EV metals.
Elon Musk 'passionate believer' in decentralization - MicroStrategy.
Speculation unraveling? Corn futures tumble 6% on larger supply.
Tuesday's Key Earnings
AutoZone (NYSE:AZO) -1.9% posting a gross margin rate drop.
Nordstrom (NYSE:JWN) -5.9% AH on a wider-than-anticipated Q1 loss.
Toll Brothers (NYSE:TOL) +0.6% AH expecting continued margin improvement.
Urban Outfitters (NASDAQ:URBN) +7.3% AH as comp retail sales grew 10%.
In Asia, Japan +0.3%. Hong Kong +0.7%. China +0.3%. India +0.8%.
In Europe, at midday, London -0.2%. Paris +0.1%. Frankfurt -0.2%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude -0.2% to $65.92. Gold +0.6% at $1908.50. Bitcoin +5.1% to $40205.
Ten-year Treasury Yield flat at 1.56%
Today's Economic Calendar
7:00 MBA Mortgage Applications
10:00 Fed's Quarles: “Insurance Regulation”
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $26B, 2-Year FRN Auction
1:00 PM Results of $61B, 5-Year Note Auction
3:00 PM Fed's Quarles: Economic Outlook