Wednesday Morning Reads
- Tech Companies Lose Jobs and Hope
- Kosovo Bans Cryptocurrency Mining
- Goldman Says Bitcoin $100,000 a Possibility
- Markets Jingle, but Not All the Way
- The 2022 Dobermans Of The Dow
- One Reason for Rising Food Prices?
- Milk Companies Look West
- Supply Chain Woes
- The Tech That Will Invade Our Lives in 2022
- Titans of Carmaking
- China Mobile Makes Debut
- Walmart Expands Its Direct-to-Fridge
- KFC to Launch Plant-Based Fried Chicken
- Indiana has begun restricting access to COVID-19 tests based on symptoms and age risk factors (ABT, TMO, QDEL). NBC News
- California believes PG&E (PCG) is responsible for Sierra Nevada fire. WSJ
- Wal Mart (WMT) and Kroger (KR) raise prices for coronavirus tests. Bloomberg
- More people in Hong Kong are getting COVID-19 vaccinations, but they are getting the inadequate Sinovac vaccine (PFE, BNTX, MRNA, JNJ, AZN, NVAX). Bloomberg
- China will review applications that could influence opinion (BABA, BIDU, TECEHY). CNBC
- Nikola (NKLA) dropped 2018 $2 bln lawsuit against Tesla (TSLA). Bloomberg
- Shopify (SHOP) is getting near decision to open up physical stores. Business Insider
What happens in Vegas stays in Vegas, except at CES... hopefully. The world's biggest tech expo, known as the Consumer Electronics Show, is making a comeback this year after going virtual in 2021 due to the pandemic. Exhibitors are optimistic the technology displayed at the event will spread into the broader market, and with thousands of attendees hunting for innovations of the future, there's a good chance that it will.
Hybrid event: While some companies like Amazon (NASDAQ:AMZN), AMD (NASDAQ:AMD), Intel (NASDAQ:INTC) and Meta Platforms (NASDAQ:FB) have canceled in-person appearances because of the rapidly spreading Omicron variant, there will still be plenty of tech on display. Expect to see the latest advances in robotics, self-driving vehicles, space, artificial intelligence, digital health, 5G, NFTs and the Metaverse. Up to 75,000 attendees and over 2,200 exhibitors are expected to arrive for this year's conference, which will take place from Jan. 5 to Jan. 8.
Those showing up to CES in person must be fully vaccinated, wear masks and have been asked to test themselves for COVID within the 24-hour period prior to entering the venues. "Certainly, it will be different from previous years. It may be messy. But innovation is messy. It is risky and uncomfortable," said Gary Shapiro, President of the Consumer Technology Association. While the actual conference starts today, a flood of CES announcements has already made headlines with keynote addresses and a "Media Day" taking place on Tuesday.
Notable revelations: Sony (NYSE:SONY) unveiled an electric vehicle prototype as it explores entering the EV market, while Deere (NYSE:DE) showed off the world's first autonomous tractor that will be available to farmers this year. Intel's Mobileye also set an audacious new self-driving car path, securing technology partnerships with Ford (F), Volkswagen (OTCPK:VWAGY) and China's Geely (OTCPK:GELYY). On the chip front, AMD revealed a $200 graphics card, Nvidia (NVDA) showed off a $249 gaming card, while Intel unveiled a new generation of laptop chips.
The global chip shortage is impacting carmakers differently, causing uneven effects down the supply chain. The latest... After 90 years as the top-selling automaker in America, General Motors (NYSE:GM) has lost its sales crown to Japan's Toyota (NYSE:TM), which also became the first non-domestic automaker to take the top spot. Newly released figures showed U.S. sales for Toyota jumping 10% last year to 2.3M, compared to the 2.2M vehicles sold by GM, whose sales were down 13% for 2021 (Ford (NYSE:F) will report 2021 sales results later today).
Better management: The modern car can have hundreds, if not thousands, of computer chips, and with a growing semiconductor shortage, Toyota began stockpiling silicon ahead of its rivals. It was also earlier to bet on a recovering U.S. car market, cutting parts and production orders less sharply than competitors to make it better prepared for a return in demand. While Toyota executives were successful in navigating many supply chain problems, they don't expect their newfound sales title to lead to a permanent shift.
"Yes, we did surpass General Motors in sales," said Jack Hollis, Toyota's senior vice president of operations in North America. "But to be clear, that is not our goal, nor do we see it as sustainable."
Siphoning market share: Lofty car prices are expected to persist amid bare dealership lots and an inventory crunch, but those who are able to deliver are poised for outsized gains. Research firm Cox Automotive estimates Tesla's (NASDAQ:TSLA) U.S. sales jumped 61% in 2021 and the EV maker's stock already climbed 9% this week after hitting delivery and production records (Tesla doesn't break out its U.S. sales). Shares of Ford (F) also closed nearly 12% higher on Tuesday as a rise in orders led it to double production plans for its new electric F-150 Lightning pickup truck.
Kentucky Fried plant-based Chicken is becoming a thing next week as restaurants nationwide add Beyond Meat's (BYND) products to their menus. The new offering will be served as part of a combo meal, or in six- or 12-piece orders (the six-piece order will start at $6.99, but may vary by location). Shares of Beyond Meat took off on the news, advancing 9% in premarket trade and giving the alternative protein maker a much-needed jolt. In the last 12 months, the stock has lost half its value, taking the firm's market cap down to $3.9B.
Backdrop: The highly-anticipated national launch follows years of testing by the Yum! Brands (YUM) chain and Beyond Meat to create the right chicken substitute. The first plant-based chicken from the partnership debuted at an Atlanta KFC restaurant in August of 2019, followed by tests in Nashville, Charlotte and southern California in 2020. Last year, Beyond announced a formal partnership with Yum to make exclusive meat substitutes for Pizza Hut, Taco Bell and KFC.
"This is really about where the customer is going; they want to eat more plant-based proteins," said Kevin Hochman, U.S. president of KFC. "It's January, so it's a time of New Year's resolutions and wanting to do something different in your diet."
Go deeper: Looking to execute some high-profile launches in 2022, Beyond Meat poached industry veterans from Tyson Foods (TSN) for its C-suite in December. Doug Ramsey took up the role as chief operating officer after three decades of overseeing Tyson's poultry and McDonald's (MCD) businesses. Bernie Adcock was also assigned to a newly created position of chief supply chain officer following 30 years of working on operations and supply chain management at Tyson.
Some staggering statistics were displayed in the Labor Department's latest JOLTS report, which details information on job openings, hires, layoffs and those that quit their positions. Employers posted 10.6M openings in November - marking the six straight month the figure has topped 10M - against 6.9M unemployed people across the nation (meaning 1.5 jobs per unemployed person). In another wild data point, the number of workers voluntarily quitting their jobs surpassed 4.5M, which was even above the prior record of 4.4M reached in September.
Who holds the power? Job turnover has been largely concentrated in hospitality, food services and other low-wage industries, where strong competition for employees has given workers the leverage to seek better pay. Many are also seeking more flexible arrangements (like remote work) with many school districts temporarily returning to virtual learning, or even within their jobs, with volatile waves of coronavirus threatening to upend their industry (early retirees?). Others are fed up with having to take on multiple roles (better work-life balance), such as flight attendants, who have unexpectedly been turned into cops or conflict resolution negotiators.
Labor disruptions are likely to persist this year, but are not likely to stall economic recovery, with total hires jumping from 6.5M to 6.7M in November, the highest level since July. "Workers continued to switch jobs in light of the many opportunities the current labor market provides," said Nick Bunker, director of research at job services company Indeed. The JOLTS report comes three days before the Labor Department releases its closely watched non-farm payrolls figure for December, which is expected to show growth of 400K jobs and the unemployment rate ticking down to 4.1%.
Outlook: In recent months, employees have gone on strike at Deere (DE), Mondelez (MDLZ) and Kellogg (K), as workers find themselves with increased leverage due to a massive labor crunch. The bargaining position has even seen average hourly earnings increase 4.8% in November from the same period a year ago, though the pay bump is having trouble keeping up with inflation. The Consumer Price Index, the Fed's preferred gauge of inflation, surged 5.7% in November compared to a year ago, wiping out all of the wage gains.
In Asia, Japan +0.1%. Hong Kong -1.6%. China -1%. India +0.6%.
In Europe, at midday, London +0.2%. Paris +0.4%. Frankfurt +0.5%.
Futures at 6:20, Dow +0.1%. S&P -0.1%. Nasdaq -0.3%. Crude -0.1% at $76.91. Gold +0.3% at $1819.30. Bitcoin flat at $46747.
Ten-year Treasury Yield -2 bps to 1.65%
Today's Economic Calendar
Oil and gas stocks sizzle on OPEC deal; Brent crude tops $80.
Jack Dorsey, Elon Musk weigh in on nuclear energy debate.
Blackstone's Byron Wien is an old-school energy bull for 2022.