Archive for July, 2021

• Morning News: July 12, 2021
  Eddy Elfenbein, July 12th, 2021 at 7:03 am

  After G7 Pledge, EU Seeks to Rival China’s ‘Belt and Road’ With Own Infrastructure Plan

  ECB’s Lagarde Foresees July Policy Shift, 2022 ‘Transition’

  China’s Slowing V-Shaped Economic Recovery Sends Global Warning

  Bond Market Junks ‘New Paradigm’ Talk, Frets About Too-Tight Fed

  Crypto Exchanges Have a Plan to Beat Binance: Play by the Rules

  Wall Street Sees Blowout Profits Ahead

  Bank Profits Are Poised to Surge as the Pandemic Recedes

  Dealmakers See M&A Rush, then Chills, in Biden’s Antitrust Crackdown

  Joe Biden Places A Bull’s Eye On ‘Big Rail,’ Reveals Epic Economic Confusion In the Process

  Biden Takes Aim At the Multitude of Ways That Businesses Can Make Your Life Miserable

  BioBonds Would Use Wall St. Tools to Fund Medical Research

  Walmart’s Flipkart Raises Funding at $37.6 Billion Valuation

  Novo Nordisk to Buy Prothena’s Heart Drug in Deal Worth Up to $1.2 Billion

  Nordstrom, Eyeing 20-Somethings, Strikes Deal With the Online Giant Asos

  Facebook Wants to Court Creators. It Could Be a Tough Sell.

  Richard Branson’s Space Jaunt Worth $841 Million for Virgin Galactic

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• Morning News: July 9, 2021
  Eddy Elfenbein, July 9th, 2021 at 7:03 am

  Binance Booms as Crypto Trading Unfolds Beyond Nations’ Reach

  Finance Ministers Meet in Venice to Finalize Global Tax Agreement

  China’s Central Bank Pivots to Easing as Growth Risks Build

  U.S. Set to Add More Chinese Companies to Blacklist Over Xinjiang

  White House to Target Bank Mergers, Financial Data with Competition Order

  The Bond Market Is Telling Us to Worry About Growth, Not Inflation

  Job Openings Are at Record Highs. Why Aren’t Unemployed Americans Filling Them?

  Can Reddit’s Silver “Apes” Beat the Market?

  The Trumpian Roots of the Chip Crisis

  Didi Shows Big Data Is Next U.S.-China Battleground

  In New Papers, Economists Argue Deficits Are Like Ponzi Schemes

  U.S. Retailers Shun Urban Malls, Shift to Open-Air Centers

  Game Over: Chinese Company Deploys Facial Recognition to Limit Youths’ Play

  Instacart Poaches One of the Highest-Ranking Female Facebook Executives, Fidji Simo, for CEO

  Investors Seek to Cut ‘Pharma Bro’ Out of His Company

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• The S&P 500 Drops More than 1%
  Eddy Elfenbein, July 8th, 2021 at 12:07 pm

  Even though the stock market had its seven-day win streak snapped on Tuesday, the S&P 500 rallied to yet another new high yesterday. Today, however, is the first time in a long time that stocks are down sharply. This morning’s jobless claims report rose to 373,000. The S&P 500 is currently off by about 1%. At its low earlier today, the index was down by 1.6%.

  As you might guess, it’s the cyclicals that are down the most. Specifically, the financials and the materials are lagging. The defensive sectors are down but not as much. When in doubt, just look at shares of Hershey (HSY). You can’t get much more defensive than chocolate. HSY is currently down 0.04%.

  

• Morning News: July 8, 2021
  Eddy Elfenbein, July 8th, 2021 at 7:05 am

  Quest to Define Post-Crisis Global Economic Order Gathers Pace

  China’s Dovish Switch Ignites Fears Over Global Recovery Trade

  A $9 Trillion Binge Turns Central Banks Into the Market’s Biggest Whales

  European Central Bank Sets Its Inflation Target at 2% in New Policy Review

  Ireland Fights For Its Tax Breaks

  Post-Fed Taper Tantrum? Not This Time, Market Strategists Say

  Falling U.S. Bond Yields May Signal Death Knell for ‘Reflation’ Stock Trade

  U.S. Banks to See Big Jump in 2Q Profits Before Results Return to Normal

  Cryptocurrency Seeks the Spotlight, With Spike Lee’s Help

  Crypto Scammers Rip Off Billions as Pump-and-Dump Schemes Go Digital

  Didi’s Regulatory Troubles Might Just Be Getting Started

  Crackdown on Chinese Tech Giants is ‘Backfiring’ on Beijing

  Dozens of States Sue Google Over App Store Fees

  Volkswagen, BMW Fined $1 Billion by EU for Pollution Cartel

  The Parking Garage of the Future

  No, Billionaires Won’t “Escape” to Space While the World Burns

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• The Fed’s Economic Outlook
  Eddy Elfenbein, July 7th, 2021 at 2:25 pm

  The federal Reserve just released the minutes from its last meeting. Here’s a look at their economic outlook.

  The U.S. economic projection prepared by the staff for the June FOMC meeting was stronger than the April forecast. Real GDP growth was projected to increase substantially this year, with a correspondingly rapid decline in the unemployment rate. Further reductions in social distancing and favorable financial conditions were expected to support output growth, even though the effects of fiscal stimulus on economic growth were starting to unwind. With the boost to growth from continued reductions in social distancing assumed to fade after 2021 and the further unwinding of fiscal stimulus, GDP growth was expected to step down in 2022 and 2023. Nevertheless, with monetary policy assumed to remain highly accommodative, the staff continued to anticipate that real GDP growth would outpace that of potential over most of this period, leading to a decline in the unemployment rate to historically low levels.

  The staff’s near-term outlook for inflation was revised up markedly, but the staff continued to expect the rise in inflation this year to be transitory. The 12 month change in total and core PCE prices had moved well above 2 percent in April, and incoming CPI data suggested that PCE price inflation would remain high in May. The recent 12-month measures of inflation were being boosted significantly by the base effects of the drop in prices from the spring of 2020 rolling out of the calculation. In addition, the surge in demand as the economy reopened further, combined with production bottlenecks and supply constraints, contributed to the large recent monthly price increases. The staff expected the 12-month change in PCE prices to gradually move down in coming months, reflecting, importantly, the fading of base effects along with smaller expected monthly price increases, but PCE price inflation was forecast to still be well above 2 percent at the end of this year. Over the next year, the transitory price increases caused by bottlenecks and supply constraints were expected to largely reverse, and the growth in demand was forecast to ease. As a result, inflation was projected to slow to slightly below 2 percent in 2022 before moving back up to a bit above 2 percent in 2023, supported by high levels of resource utilization.

  The staff continued to see the uncertainty surrounding the economic outlook as elevated, although increasingly widespread vaccinations, along with ongoing policy support, were viewed as helping to diminish some of these uncertainties. Nevertheless, the staff judged that the risks around their strong baseline projection for economic activity were still tilted somewhat to the downside, as adverse alternative courses of the pandemic—including the possibility of the spread of more-contagious, more-vaccine-resistant COVID-19 variants—seemed more likely than outcomes that would be more favorable than in the baseline forecast. The staff continued to view the risks around the inflation projection as roughly balanced. On the upside, bottlenecks, supply disruptions, and historically high rates of resource utilization were seen as potential sources of greater-than-expected inflationary pressures, particularly if there were a significant rise in inflation expectations that altered inflation dynamics. On the downside, if the effects of supply constraints proved to be transitory, as expected, then the inflation record from the past 25 years suggested the possibility that low underlying trend inflation and a flat Phillips curve could cause inflation to revert to relatively low levels despite a strengthening economy.

• 9.2 Million Unfilled Jobs
  Eddy Elfenbein, July 7th, 2021 at 11:16 am

  Yesterday, the S&P 500 snapped its seven-day winning streak. The market is mostly flat so far this morning.

  Later today, the Fed will release the minutes from its last meeting. There was a disconnect at the meeting. The economic forecasts from the Fed officials were much more hawkish than the comments by the Fed. Hopefully, the minutes will clarify the issue.

  This morning’s job openings report was little changed at 9.2 million. That’s the number for May. (Technically, it rose a little bit to a new all-time high.)

  Middleby looks to lose its battle to buy Welbilt (which is fine by me). Italy’s Ali Group raised its offer to buy Welbilt to $24 per share. Welbilt looks to go ahead with Ali Group. This will earn MIDD a new break-up fee.

  Middleby stayed in the news by releasing updates for guidance for this quarter and full year. The company was sure to mention that this guidance is above current estimates.

  For Q2, MIDD sees revenue of $808 million and adjusted EBITDA of $186 million. Wall Street had been expecting $794 million and $174 million respectively.

  For all of 2021, MIDD now sees revenue of $3.244 billion and adjusted EBITDA of $730 million. That’s above consensus of $3.167 billion and $704 million.

• Morning News: July 7, 2021
  Eddy Elfenbein, July 7th, 2021 at 7:05 am

  Oil Rises as OPEC+ Clash Over Supply Boost Keeps Prices Volatile

  Saudi Arabia and the UAE Can’t Afford Not to Be Friends Despite Their OPEC Tiff

  European Commission Sees the Economy Recovering Faster Than Expected.

  China Considers Closing Loophole Used by Tech Giants for U.S. IPOs

  Didi Removed from China’s WeChat and Alipay Apps for New Users in Another Big Blow

  IMF Chief Sees Risk of Sustained Rise in U.S. Inflation

  A Planned Biden Order Aims to Tilt the Job Market Toward Workers

  Yellen’s Next Test: Persuading G20 That U.S. Congress Will Not Block Tax Deal

  Running for Safety When Market Corrections Occur Cn Be Costly

  Amazon Notches Comeback Win in Years-Long Pentagon Cloud Battle

  Revolt Against Bank Fees Mints a $3 Billion Fortune for Fintech Founders

  Russia ‘Cozy Bear’ Breached GOP as Ransomware Attack Hit

  Discovery’s David Zaslav Promises More Media Merger Mania at Sun Valley

  Violence, Drugs And Fast Food: How Americans’ Risky Behavior Surged While Under A Covid Lockdown

  Ever Given Container Ship Begins Exit from Suez Canal 106 Days After Getting Stuck

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• Morning News: July 6, 2021
  Eddy Elfenbein, July 6th, 2021 at 7:07 am

  OPEC+ Crisis Propels Oil to Six-Year High

  Is This the End of OPEC? How Saudi Arabia and UAE Infighting Threatens the Future of the Oil Alliance

  Global Corporate Tax Overhaul Faces Rocky Road to Completion

  Empathy Bootcamp? UK Banks Seek Payback on $105 Billion COVID Loans

  When Will China Overtake the U.S. as the World’s Top Economy? Maybe Never

  Quickening U.S. Recovery Puts Fed Taper Discussion in Focus

  The Next Big Divide in Finance Takes Shape in Your Office

  American Internet Giants Hit Back at Hong Kong Doxxing Law

  China’s Crackdown on Didi Is a Reminder That Beijing Is in Charge

  Big Ransomware Hack Highlights a Robust Software Business Model

  No Soil. No Growing Seasons. Just Add Water and Technology.

  Here’s What You Should Know About That Eye-Popping Sign-On Bonus

  Airbnb’s Pandemic Party-Blocking Spree Rages On

  SoftBank Pays $1.6 Billion for Yahoo Japan Rights

  Amazon Transformed Seattle. Now, Its Workers Are Poised to Take It Back.

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• Italy’s Ali Group Raises Offer for Welbilt to $3.41 Billion, Trumping Middleby Bid
  Eddy Elfenbein, July 5th, 2021 at 11:45 pm

  From Reuters:

  Italy’s Ali Group on Monday said it raised its offer to buy Welbilt Inc, valuing the U.S. food service equipment maker at $3.41 billion.

  The deal trumps a $2.9 billion all-stock offer for Welbilt put forward by competitor Middleby in April to beef up its commercial foodservice platform.

  Welbilt will receive $24 for each share, representing a premium of 3.53% to the closing price on Friday.

  The offer is a raised bid from its previous $23 per share offer in May.

  Ali Group said that it has obtained fully underwritten, binding commitment letters for debt financing from Goldman Sachs International and Mediobanca.

  Based near Milan, Ali Group, with 80 brands, operates worldwide and supplies foodservice equipment to businesses ranging from hotels to schools and supermarkets.

• Morning News: July 5, 2021
  Eddy Elfenbein, July 5th, 2021 at 7:09 am

  OPEC+ Crisis Deepens as Saudi Arabia Refuses to Budge

  Credit Suisse Strategist Sees $1 Trillion Problem for Money Markets

  Why Is China Cracking Down on Didi After U.S. IPO?

  Chinese Antitrust Regulator to Block Tencent’s Videogaming Merger

  The Tech Cold War’s ‘Most Complicated Machine’ That’s Out of China’s Reach

  Britain Proposes Tech Company Listing Reforms to Catch Up with New York

  Stocks Are Expensive but that Doesn’t Mean the Bull Run is Ending

  Hacking Wall Street

  Pandemic Wave of Automation May Be Bad News for Workers

  Investigating Amazon, the Employer

  ‘Absolutely a Sprint’: How Andy Jassy Raced to the Top of Amazon

  After Pressuring Telecom Firms, Myanmar’s Junta Bans Executives from Leaving

  The Charges Against the Trump Organization Are a Master Class in Tax Evasion

  The US is a First-World Nation With a Third-World Rail System

  Sun Valley’s Billionaire ‘Summer Camp’ Is Back After A Virus-Induced Break

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