Archive for December, 2021

• Morning News: December 21, 2021
  Eddy Elfenbein, December 21st, 2021 at 7:05 am

  Extreme Bidding Wars Are Raging in One of World’s Riskiest Housing Markets

  JPMorgan’s Paris Traders Are Only Part of the Threat to London

  Global Retail’s Battle With Covid Actually Saved Its Stores

  Retailers Find TikTok a ‘Sunny Place’ for Advertising

  Crypto Funds Explode in Boom Year Marked by First U.S. Bitcoin ETF

  How the 2020s Economy Could Resemble the 1980s

  Deal With Ted Cruz Sets Stage for Russia Pipeline Fight in Early 2022

  Coal Miners Urge Manchin to Rethink Opposition to Spending Bill

  E.P.A. Announces Tightest-Ever Auto Pollution Rules

  What We Lose if We Don’t Build Back Better

  Boeing and Airbus want Biden Administration to Delay Rollout of 5G Cell Service, Citing Safety Concerns

  Embraer Flying Taxi Unit Eve, Valued at $2.9 Billion, to List on NYSE

  Biogen Cuts Price for Alzheimer’s Drug Aduhelm by Half

  Jack Dorsey Stirs Uproar by Dismissing Web3 as a Venture Capitalists’ Plaything

  How the Copy Cats Came for Clubhouse

  Nikola Corp Agrees to Pay $125 Million to Settle SEC Charges of Defrauding Investors

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• Oracle to Pay $95 per Share for Cerner
  Eddy Elfenbein, December 20th, 2021 at 10:51 am

  This morning, we’re getting more details on the Oracle (ORCL)/Cerner (CERN) deal. Oracle is expected to pay more than $30 billion for Cerner. The deal will be all cash at $95 per share. The deal includes Cerner’s debt. Currently, Cerner is trading for $90.63 per share which is up about 1%.

  The stock market is down this morning. Some commentators are pointing fingers at the failure of President Biden’s Build Back Better plan. On Sunday, Senator Joe Manchin announced his opposition to the bill.

  The stock market has been down as much as 1.74% this morning. As I write this, the High Beta Index is off by 2.32% while Low Vol is down by 1.09%.

• Morning News: December 20, 2021
  Eddy Elfenbein, December 20th, 2021 at 7:11 am

  Davos Postponed Over Omicron Uncertainty

  Global M&A Activity Smashes All-Time Records to Top $5 Trillion in 2021

  Crypto Barrels Toward 2022 After Adding $1.5 Trillion in Value

  Nagel Returns to Bundesbank as Boss, Likely to Maintain House View

  The Fed’s Pivot Is the Opposite of Hawkish

  Paul Volcker, the Fed, and ‘Tight Credit.’ The Myth That Won’t Die.

  The Path Ahead for Biden: Overcome Manchin’s Inflation Fears

  Going To Cash Can Be As Costly As A Market Crash

  Drones Take Center Stage in U.S.-China War on Data Harvesting

  Oracle Is Said Expected to Acquire Cerner for Mid $90s/Share

  Bank of Montreal to Buy BNP Paribas’s U.S. Unit

  A $550 Million Springsteen Deal? It’s Glory Days for Catalog Sales.

  ‘Spider-Man: No Way Home’ Ensnares Audiences and Refills Studio Coffers

  Zegna’s I.P.O. Path Raises Question: Is This the Next Big Fashion Trend?

  Elon Musk Says He’ll Pay Over $11 Billion in Taxes This Year

  China Hits Top Influencer With $210 Million Fine Over Taxes

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• Oracle/Cerner is Happening
  Eddy Elfenbein, December 19th, 2021 at 9:19 pm

  Oracle expected to announce acquisition of Cerner tomorrow morning in all cash deal for "mid 90's" per share, according to sources. $ORCL, $CERN WSJ reported talks late last week.

  — David Faber (@davidfaber) December 20, 2021

• WSJ: Oracle in Talks to Buy Cerner
  Eddy Elfenbein, December 17th, 2021 at 4:05 pm

  Great news! Yesterday evening, the Wall Street Journal reported that Oracle (ORCL) is in talks to buy Cerner (CERN) for “a deal that could be worth around $30 billion.”

  A $30 billion valuation would give Cerner a share price of $102. The stock closed Thursday at $79.49 per share. This is very good news for us and our Buy List.

  An agreement could be finalized soon, some of the people said, assuming the talks don’t fall apart or drag out. Should a deal come together, it would rank as the biggest ever for Oracle, which has a market value of more than $280 billion.

  Kansas City, Mo.-based Cerner designs software that hospitals and doctors use to store and analyze medical records and other healthcare data. It has a market value of around $23 billion. With a typical takeover premium, a deal would be expected to value the company at something like $30 billion, though exact terms being discussed couldn’t be learned.

  Neither company has made an announcement. I expect to hear something official next week.

  Shares of Cerner jumped nearly 13% today to close at $89.77 per share. At one point, Cerner traded as high as $92.34 per share today.

  It took us a while but we finally hit it big with Cerner.

  

• Morning News: December 17, 2021
  Eddy Elfenbein, December 17th, 2021 at 7:04 am

  Inflation Is Near a 40-Year High. Here’s What It Looks Like.

  Omicron Is an Economic Threat, but Inflation Is Worse, Central Bankers Say

  Japan’s Central Bank Shuns Tightening Trend, Citing Lack of Inflation

  The Risk of Avoiding Emerging Markets

  What Congress Traded in 2021

  Green-Energy Race Draws an American Underdog to Bolivia’s Lithium

  Reddit IPO to Test Social Media Platform’s ‘Meme’ Stock Hype

  Judge Overturns Purdue Pharma’s Opioid Settlement

  S&P Dumps Chinese Property Giant Evergrande Into Default

  Chinese Workers Are Saying Enough Is Enough, and Xi Is Not Amused

  Oracle in Talks to Buy Cerner

  Amazon And UPS Are Betting This Electric Aircraft Startup Will Change Shipping

  How McDonald’s Made Enemies of Black Franchisees

  GM Bids a Brusque Farewell to the CEO of Cruise

  Family Business Deals Help Fuel Carvana’s Explosive Growth

  Today’s 8th Graders Won’t Have to Take the SAT If They Apply to Harvard

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• Morning News: December 16, 2021
  Eddy Elfenbein, December 16th, 2021 at 7:04 am

  Turkish Lira Slumps to New Low After Interest Rate Cut

  Top Central Banks Go Their Own Ways Into 2022

  BOE Surprises With First Hike in Crisis to Curb Inflation

  Fed Shifts to Inflation Battle, Winding Down Pandemic Support

  Why Jerome Powell Pivoted on Inflation

  How to Soften the Bullwhip Effect

  Holiday Retail Sales Weaker Than Expected Amid Inflation Concerns

  A Hostile Takeover of the FDIC

  A Wild, Emotional Year Has Changed Investing—Maybe Forever

  Shareholder Group Pressures U.S. Banks to Drop Fossil Fuels Faster

  N.Y.C.’s Gas Ban Takes Fight Against Climate Change to the Kitchen

  Netflix Slashes India Prices in Battle with Amazon, Disney

  Reddit Files Confidentially for IPO

  Jobless for a Year? That Might Be Less of a Problem Now.

  Fired JPMorgan Trader Shows It Pays to Win Your Old Job Back

  Money Manager Vanishes With $313 Million From China Builder

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• Heico Earned 62 Cents per Share
  Eddy Elfenbein, December 15th, 2021 at 4:32 pm

  After the closing bell, Heico (HEI) reported fiscal Q4 earnings of 62 cents per share. That’s up from 45 cents per share one year ago. Wall Street had been expecting 58 cents per share.

  For the year, Heico made $2.21 per share which was down slightly from the $2.29 per share it made in the year before.

  For the quarter, net sales increased 20% to $509.4 million and operating income increased 29% to $115.0 million.

  CEO Laurans A. Mendelson said:

  As we look ahead to fiscal 2022, we expect the commercial air travel recovery to continue, particularly in certain domestic travel markets, while less so in international markets, even though the Pandemic will likely continue to adversely impact the commercial aerospace industry and HEICO. International markets have not recovered to the extent of domestic markets, and while we are confident of their future recovery and the potential sales increase, the timing is uncertain. We remain cautiously optimistic that the ongoing worldwide COVID-19 vaccine rollouts, including boosters, will continue to positively influence commercial air travel, and benefit the markets we serve. As we’ve all continued to see and learn, it is very difficult to predict the Pandemic’s path and effect, including factors such as new variants and vaccination rates, which can impact our key markets. Therefore, we feel it would not be responsible to provide fiscal 2022 net sales and earnings guidance at this time. But, our ongoing conservative policies, strong balance sheet, and high degree of liquidity enable us to invest in new research and development, execute on our successful acquisition program, and position HEICO for market share gains.”

  The stock is up 3% after hours.

• Today’s Fed Policy Statement
  Eddy Elfenbein, December 15th, 2021 at 2:02 pm

  The Fed decided to double taper to $30 billion per month. Here’s today’s Fed policy statement:

  The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

  With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen. The sectors most adversely affected by the pandemic have improved in recent months but continue to be affected by COVID-19. Job gains have been solid in recent months, and the unemployment rate has declined substantially. Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

  The path of the economy continues to depend on the course of the virus. Progress on vaccinations and an easing of supply constraints are expected to support continued gains in economic activity and employment as well as a reduction in inflation. Risks to the economic outlook remain, including from new variants of the virus.

  The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent. With inflation having exceeded 2 percent for some time, the Committee expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment. In light of inflation developments and the further improvement in the labor market, the Committee decided to reduce the monthly pace of its net asset purchases by $20 billion for Treasury securities and $10 billion for agency mortgage-backed securities. Beginning in January, the Committee will increase its holdings of Treasury securities by at least $40 billion per month and of agency mortgage backed securities by at least $20 billion per month. The Committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook. The Federal Reserve’s ongoing purchases and holdings of securities will continue to foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.

  In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

  Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Raphael W. Bostic; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Mary C. Daly; Charles L. Evans; Randal K. Quarles; and Christopher J. Waller.

  Here are the economic projections.

• Retail Sales Rose 0.3% Last Month
  Eddy Elfenbein, December 15th, 2021 at 1:34 pm

  The stock market is down again today, but not by much. Today could be our third straight loss this week. Once again, it’s the high beta stocks that are feeling the heat. Many of the low volatility stocks are doing just fine.

  This morning we learned that for November, retail sales rose by 0.3%. That’s lower than the 1.8% increase we had in October. (That’s seasonally adjusted.) In the last year, retail sales are up 18%. Over the same time, consumer prices rose by 6.8%.

  This is more of the trend of depressed, angry, disillusioned shoppers who are flooding the malls, gobbling up houses and madly bidding up stocks. I say this jokingly, but there’s some truth to it.

  I love this bit from the WSJ:

  Jill Grobowsky Bergus, co-owner of three Lockhart Smokehouse barbecue restaurants in the Dallas area, said that they have had to raise prices by 20% to 30% in recent months and have held back from further increases because they worry customers will blanch.

  “We’re talking to our meat supplier like we’re day traders,” Ms. Grobowsky Bergus said. Beef prices are up 21% over the past year while pork is up 17%, according to government data. Spending at restaurants was up 1% in November over the previous month.

  Shortages of materials and labor have also caused problems. Lockhart Smokehouse has raised pay to keep their employees and has had to contend with suppliers who don’t have enough delivery drivers. Even the 2-ounce plastic cups for barbecue sauce have been in short supply.

  Homebuilder confidence remains very high. Today we learned that the index for this rose by one point to 84. Any number above 50 is positive.

  The Fed’s policy statement is due out at 2 pm.