Intersting thoughts

[Bozzie]

July 17, 2021

Good morning. Inflation is running higher than expected. Should you be worried? In today’s newsletter, we ask experts to weigh in.

(Was this forwarded to you? Sign up here.)

Illustration by the New York Times; Photo by Mike Segar/Reuters

[h=2]Should you worry about inflation?[/h]

Fresh data this week showed that consumer prices continue to increase at the fastest pace since 2008, and are moving up more rapidly than many economists, including those at the Federal Reserve, expected. The jump is clearly tied to the economic rebound from the pandemic.

What is less clear? When today’s fast inflation will fade, and by how much.

Most policymakers say their best guess is that prices will settle down as businesses move past a summer burst and supply catches up with consumer demand. They also point out that global forces have dragged inflation lower for years.

But some economists, and many Republicans, warn that today’s quicker increases could change consumer and business expectations, making it more likely that rapidly rising prices are here to stay. That could force the Fed to pull back its support for the economy to slow demand and to keep inflation under control, possibly plunging the economy back into recession.

Which side is right — the sanguine or the fretful — will prove hugely consequential for everyday Americans. Inflation can make debts easier to pay off and can give workers room to negotiate for higher wages. But it can also erode purchasing power, deplete savings and, if it is severe enough, destabilize entire economies.

“We’re experiencing a big uptick in inflation, bigger than many expected, bigger certainly than I expected,” Jerome H. Powell, the Fed chair, told lawmakers this week. “We’re trying to understand whether it’s something that will pass through fairly quickly or whether, in fact, we need to act.”

Mr. Powell listed reasons to expect price pressures to fade: The data have popped thanks to statistical quirks and the end of lockdowns. But he also made clear that the moment is uncertain, and that “we’re humble about what we understand.”

DealBook asked experts in economics, former government officials and critics of leaders’ current policies if they’re worried about the path ahead for inflation. — Jeanna Smialek

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

[h=2]Austan Goolsbee: Temporary supply issues are to blame.[/h]

Mr. Goolsbee is a professor of economics at the University of Chicago Booth School of Business.

I lean Team Temporary. Economists call the “potential” of the economy the output it can sustain at full employment. When the economy gets above potential output — as it seems imminently in danger of — it’s time to think about overheating.

The amount we exceeded potential output in the 1960s, which helped ignite more than a decade of inflation, was much higher than what it is now and remained so for almost eight years. Our situation looks more like the situations in the late 1990s, the mid-2000s, and 2017 to 2019, none of which ignited sustained inflation despite unemployment rates well below today’s.

This suggests temporary supply chain issues unless something about the pandemic fundamentally changed the sustainable rate of employment in the economy.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

If the virus rages back, the talk of overheating could be moot. But if temporary inflation is a sign that we are headed back to a growing G.D.P. with rising wages and plentiful jobs, what’s the scare in that?

What business leaders are saying:

“Will inflation be transitory? There are many reasons that the peaks we’ll see at the moment will be. But what’s the longer-term trend? That, I think, everyone will be keenly watching. We think the jury is out.” — Jane Fraser, chief executive of Citigroup “Is there somewhat more inflation out there? There is. Are we going to be pricing to deal with it? We certainly are.” — Hugh Johnston, chief financial officer of PepsiCo “I don’t think it’s all going to be temporary, but that doesn’t matter if we have very strong growth.” — Jamie Dimon, chief executive of JPMorgan Chase

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

[h=2]Laura Rosner-Warburton: Inflation is tied to the global pandemic.[/h]

Ms. Rosner-Warburton is a senior economist and founding partner at MacroPolicy Perspectives.

The effects of fiscal support are already fading, which should reduce demand and lessen upward pressure on prices. Absent strong fiscal support, consumers’ price sensitivity should return. Meanwhile, supply and production are expanding, easing some of the shortages of key items whose prices have risen sharply.

In short, this year’s burst of inflation is very closely tied to the unprecedented events surrounding the global pandemic and not the start of a new regime in inflation dynamics.

[h=2]Glenn Hubbard: ‘Transitory’ doesn’t mean anything.[/h]

Mr. Hubbard is dean emeritus of Columbia Business School.

The way I think about inflation is: What would happen if I’m wrong in my outlook? The Fed frames it as follows: “If we tighten too early, we’re going to lose jobs and wage gains, particularly for vulnerable people. And if we tighten too late, there’s inflation. But we are watchful and have tools. We won’t be too late. By the way, the markets believe us because inflationary expectations are steady. So we’re fine.”

But that’s not how I see it. And that’s why I’m worried. Thinking about it as a risk management problem, if the central bank doesn’t take its foot off the accelerator gradually now, it may have to slam on the brakes later. And if I were Chair Powell, I would tell people what the Fed really thinks, taper bond purchases and then tell people when the Fed plans to tighten.

My worry is, if the Fed doesn’t do this approach, it risks either a recession or financial instability, because of bubbling-over housing markets or excess risk taking.

The problem with saying inflation is “transitory” is that there’s no definition there. I mean, in the eyes of God, my life span is temporary. What is transitory?

[h=2]Jason Furman: Inflation will remain higher than expected, and that’s OK.[/h]

Mr. Furman is a professor of economic policy at Harvard University.

I think inflation is going to slow dramatically from its recent pace. But its recent pace has been so high that even after it slows, it could easily settle down at something more like 2.5 to 3 percent rather than the 2 percent that the Federal Reserve and most forecasters are expecting. I don’t view that as a huge problem. I think there are some advantages to having higher inflation.

But I worry about three things. Number one, if the Fed overreacts in trying to get rid of the inflation, it could cause a recession. Number two, when events happen that no one is expecting, it creates turbulence in financial markets. Right now, financial markets are betting that inflation is going to go back to 2 percent. If that turns out to be wrong, financial markets will need to reorient themselves. And usually that works fine, but sometimes it ends up hurting the economy. And finally, when you have surprise inflation, it tends to do things like take away from the purchasing power of workers.

Since World War II, there have been six periods when inflation surpassed 5 percent:

July 1946 to October 1948: Supply shortages and pent-up demand contributed to postwar inflation. December 1950 to December 1951: As the Korean War started, consumers stockpiled goods. March 1969 to January 1971: A booming economy drove price increases. April 1973 to October 1982: Oil prices surged, twice. April 1989 to May 1991: The first Persian Gulf war led to an increase in oil prices. July to August 2008: Gas prices skyrocketed.

Of these six periods, the White House argues the first is the most relevant. “Not surprisingly, supplies were running low or were exhausted entirely during the war,” a group of economic advisers wrote recently. “Today’s shortage of durable goods is similar — a national crisis necessitated disrupting normal production processes.”

Inflation during that period declined after supply chains normalized and demand leveled off, and the White House argues the same could happen with today’s inflation, too.

[h=2]Christina Romer: The lesson of past inflation is to remain flexible.[/h]

Ms. Romer is a professor of economics at the University of California, Berkeley.

Like most economists and policymakers, I expect much of the rise in inflation to be temporary. Many pundits invoke the experience of the 1960s and ’70s as a cautionary tale for the current era. They are particularly worried that inflation expectations, which have been low and steady for the last four decades, could become “unanchored” and rise quickly. While it is true that inflationary expectations rose in the 1960s and ’70s, it took many years of above-normal growth and actual inflation to push up inflationary expectations and start a wage-price spiral.

The more important lesson from the 1960s and ’70s is that we need to remain flexible in our thinking. Like today, policymakers in that earlier era frequently cited temporary factors — droughts, oil price spikes and union activity — as the source of inflation. In fact, however, they were facing very persistent, demand-fueled inflation. If the inflation numbers today don’t settle down as the recovery progresses, we will need to quickly admit that we were wrong and that the inflation is of a more worrisome kind.

[h=2]Robert Shiller: Stop making the same mistakes.[/h]

Mr. Shiller is a professor of economics at Yale University.

Inflation rewards debtors and hurts creditors. It tends to help young homeowners, since they tend to be debtors, at the expense of older people, who may be living off pensions that are not fully indexed to inflation.

The “great inflation” that came to an end after Paul Volcker took the helm at the Fed in 1979 was a national tragedy for its impact on pensioners and minimum-wage earners, since the minimum wage was also not adequately indexed to inflation.

People don’t demand indexation often enough, and poorly understand inflation. Irving Fisher, a professor of economics at Yale, wrote a book in 1928, “The Money Illusion,” that described popular misunderstandings of inflation. People are still making the same mistakes almost 100 years later, and these mistakes contribute to income inequality. They also create a feeling of ill will, and this social discord creates problems for all of us.

[h=2]Josh Bivens: The Fed’s reaction to inflation could be worse than inflation itself.[/h]

Mr. Bivens is the director of research at the Economic Policy Institute.

Rising prices can certainly squeeze families’ budgets, all else equal. But recent inflation has been driven by price spikes in a small number of sectors, such as used cars, hotel rooms and airfares. Inflation driven by idiosyncratic sectoral shocks should not spur policymakers to stomp on the brakes.

The only inflation that should spur more contractionary macroeconomic policy is inflation that comes from the labor market, when jobs become so plentiful that workers can successfully demand wage growth that runs far ahead of the economy’s capacity to deliver it. This has not happened in the United States for a long time.

Inflation hawks might argue that this is because the Fed successfully stayed ahead of the inflation curve. But too often the Fed has cut recoveries short before wages for most U.S. workers saw decent growth. In a recent study, we estimated that too-austere macroeconomic policy is the most important reason for anemic wage growth seen by the vast majority of U.S. workers after 1979.

So, recent inflation is a little worrisome, but an inappropriate response to it is very worrisome.

Want to share The New York Times with your friends and family? Invite them to enjoy unlimited digital access to our journalism with this special offer.

What do you think? Will high inflation stick around or fade away? Let us know: dealbook@nytimes.com.

Continue reading the main story

 

[Bozzie]

	Read in Browser
LISTEN TO TODAY'S PODCAST AVAILABLE AT 8AM ON:
Top News Shutterstock​ Stocks fell Friday to push the major market indexes into the red for the week, as rising concerns over inflation outweighed strong retail sales data and better than expected quarterly earnings reports from the big U.S. banks. The major market averages all snapped three-week winning streaks, with the Dow dropping 0.5%, the S&P 500 slipping nearly 1% and the Nasdaq Composite closing 1.8% lower. But the bond market continues to buck inflation fears, as the 10-year U.S. Treasury yield fell to around 1.30%. Crude oil slumped to its biggest weekly loss since mid-March as markets face the prospect of extra supplies from OPEC producers, and a stronger dollar also hurt the appeal of commodities priced in the U.S. currency this week. Space Congrats to Richard Branson! The 70-year-old founder of Virgin Galactic (NYSE:SPCE) rode the VSS Unity into the lower reaches of space on Sunday morning following a 17-year quest towards suborbital space tourism. "For the next generation of dreamers, if we can do this, just imagine what you can do," he said before unlatching his seat belt. Branson can now claim victory in the "billionaire space race" by riding his own spacecraft, though Blue Origin's (BORGN) Jeff Bezos will take his own ride to space next week, while Elon Musk has been in a class of his own by concentrating on the orbital arena and beyond via SpaceX (SPACE). Bigger picture: Branson believes that there is a market to carry as much as 2M people on suborbital spaceflights priced in the $250,000 to $500,000 range, meaning a $1T market at the upper level. The industry could also expand. "There's room for 20 space companies to take people up there," Branson said in a recent interview. "The more spaceships we can build, the more we can bring the price down and the more we'll be able to satisfy demand and that will happen over the years to come." Responding to the latest developments, shares of Virgin Galactic opened the week in the ionosphere, before tumbling back to Earth. Galactic was among the recent generation of space companies to go public via a SPAC in 2019, but it hasn't stopped there. Over the past two months, rocket builder Astra Space (NASDAQ:ASTR) and satellite broadband firm AST SpaceMobile (NASDAQ:ASTS)have begun trading, while companies like Rocket Lab, BlackSky, Spire Global and Momentus are expected to follow suit. What to watch next: Jeff Bezos will make a run at suborbital space on July 20, launching aboard Blue Origin's New Shepard rocket. The system launches vertically from the ground, compared to Virgin Galactic's SpaceShipTwo/VSS Unity, which is released mid-air and glides back to Earth for a runway landing. Blue Origin has also emphasized that it's flying above the Karman Line, a boundary 62 miles above sea level that's commonly referred to as the beginning of space (Galactic's flight only reaches 50 miles up, an area the FAA says still makes you an astronaut). Sponsored By Fundrise Building Blocks to Real Estate Investing Remember when snagging real estate was an unattainable date, who, try as you might, your little engine never could? Now it can. With Fundrise, invest today in the future you imagined for tomorrow. Quality assets; Low fees; Powered by super smart technology. Crowd-funded investment opportunities offer easy access to institutional-caliber real estate. Fundrise can help you develop a diversified portfolio strategy across numerous investment funds. More than 150k active investors have earned $100M+ in net dividends so far. Start building wisely today. Financials Bank results The second quarter earnings season formally kicked off this week as JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) released results on Tuesday. Other major financial institutions also reported, including Bank of America (NYSE:BAC), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) on Wednesday, and Morgan Stanley (NYSE:MS)on Thursday. While the banking industry unveiled some blowout results,much of that growth was measured against a time when much of the economy was brought to a pandemic standstill, and the stocks inched marginally higher. Some highlights: Goldman: Investment banking revenue soared 36% Y/Y to $3.6B, helped by financial advisory, corporate lending and underwriting units. Morgan Stanley: Equities trading outperformed in Q2, producing $2.83B in revenue. Citi: Quarterly profit surged more than 5x to $6.2B, driven by the lower cost of credit. Commodities Timberrr! Supply chain shortages, coupled with a swift economic recovery, saw prices of many items soar during the pandemic. One of the most notable increases was for lumber, which is a significant material for many industries including homebuilding. While the historic run has come to an end, it still could take a while for prices to go back to their pre-pandemic levels. Update: Lumber futures (LB1:COM) surrendered all of their astronomical 2021 gains on Monday, settling down 5.6% to $712.90 per 1,000 board feet in Chicago. Supply and demand are behind the latest moves as homebuilders and DIYers started to pare back on projects due to prices, while sawmills upped their production levels for the same reason. In fact, new home construction and home improvement sales in May were 8.8% and 8.1% lower than their highs seen in March. At one point this year, lumber futures were even trading as high as $1,733.50 per 1,000 board feet, more than quadruple the level of a year earlier. "We could be in for a few more weeks of declines. Mill production has ramped up as the labor related issues from COVID dissipate," said Dustin Jalbert, senior economist at Fastmarkets RISI. "There's a lot of inventory buildup at the mills that has to clear." Wood has even turned lower as wildfires rage and railcars are gridlocked in British Columbia, a major producing region. Where do we go from here? Lumber futures have mostly in the $200-$400 per 1,000 board feet range before the pandemic, and each dip in the wholesale market could take weeks or months to be reflected in store aisles. Lumber prices are undergoing a "paradigm shift" and are in the process of determining a new and much higher average price level as a result, according to lumber trading strategist Greg Kuta of Westline Capital Strategies. Scott Reaves of Domain Timber Advisors even forecasts prices could stay above $500 per 1,000 board feet for the next 5-8 years due to robust homebuilding across the U.S. (15 comments) Central Banking Powell on the Hill Fed Chair Jerome Powell was in the hot seat on Wednesday and Thursday as he headed before Congress for his semiannual testimony on monetary policy. Inflation, which was once the elephant in the room, is became the most heated topic at the grilling following data on rising costs across the American economy. The Consumer Price Index grew at its fastest clip since August 2008, climbing 5.4% year-over-year versus a forecast of 4.9%. Until recently, the Fed has stuck to the script that inflation will be "transitory," though some rumblings over that outlook are being heard at the FOMC and broader investing community. Modest inflation can be good, but when things grow too fast and exceed a nation's fundamental capacity, the economy can overheat. When things slow down, a recession can hit, and central banks may attempt to raise interest rates before then to lower the amount of spending and borrowing in the economy. "This is a shock going through the system associated with reopening of the economy, and it's driven inflation well above 2%. And of course, we're not comfortable with that," Powell told lawmakers. "To the extent it is temporary, then it wouldn't be appropriate to react to it, but to the extent it gets longer and longer, we will have to continue to reevaluate the risks that would affect inflation expectations." Thought bubble: While we've seen price increases before, most of them were taking place in areas heavily hit by the pandemic. Those included building materials and travel-related costs, which were hit by supply chain problems and shutdowns, but the most recent report suggested that these increases are broadening out. Core inflation (excluding food and energy) came in at 4.5%, marking the largest increase since September 1991. Automotive End of the combustion engine? We reported on the discussions last month, but the European Commission this week proposed a date to call time on the internal combustion engine. Sales of new cars and vans that produce CO2, including plug-in hybrids, would be banned as of 2035, meaning "almost 100%" of vehicles on the road would be emissions-free by 2050. While the decision would force the EV revolution upon European automakers, some are already planning moves of their own. In June, Volkswagen (OTCPK:OTCPK:VWAGY) paved its way toward an EV future by pledging to halt sales of ICE vehicles in Europe by 2035, while Ford (NYSE:F) has said it will only sell EVs in Europe by 2030. Volvo (OTCPK:OTCPK:GELYF) is retiring the ICE and hybrids by the same year and Honda (NYSE:HMC) announced plans to phase out gas-powered cars by 2040. Meanwhile, Stellantis (NYSE:STLA) is no longer planning to invest in the development of new internal combustion engines, while General Motors (NYSE:GM) will stop building polluting vehicles by 2035. European Green Deal: "To ensure that drivers are able to charge or fuel their vehicles at a reliable network across Europe, the revised Alternative Fuels Infrastructure Regulation will require Member States to expand charging capacity in line with zero-emission car sales, and to install charging and fueling points at regular intervals on major highways: every 60 kilometers for electric charging and every 150 kilometers for hydrogen refueling," the European Commission said in a statement. Just don't catch fire... General Motors on Wednesday told owners of 2017-2019 Bolt EVs not to park their vehicles inside or charge them unattended overnight after two of the EVs went up in flames. The cars had even been repaired as part of a recall of 69,000 vehicles that were flagged for fire risks, but that didn't seem to help. Other EV rollouts have also been interrupted by fires involving lithium-ion batteries, including Ford, BMW and Hyundai (OTCPK:OTCPK:HYMTF), which have issued recalls in recent months for new battery-powered models. (608 comments) ​ U.S. Indices Dow -0.5% to 34,688. S&P 500 -1.% to 4,327. Nasdaq -1.9% to 14,427. Russell 2000 -5.2% to 2,161. CBOE Volatility Index +14.% to 18.45. S&P 500 Sectors Consumer Staples +1.3%. Utilities +2.6%. Financials -1.6%. Telecom -0.3%. Healthcare -0.2%. Industrials -1.5%. Information Technology -0.6%. Materials -2.4%. Energy -7.7%. Consumer Discretionary -2.6%. World Indices London -1.6% to 7,008. France -1.1% to 6,460. Germany -0.9% to 15,540. Japan +0.2% to 28,003. China +0.4% to 3,539. Hong Kong +2.7% to 28,082. India +1.4% to 53,140. Commodities and Bonds Crude Oil WTI -4.2% to $71.46/bbl. Gold +0.1% to $1,812.6/oz. Natural Gas +0.1% to 3.679. Ten-Year Treasury Yield +0.3% to 133.84. Forex and Cryptos EUR/USD -0.56%. USD/JPY -0.08%. GBP/USD -0.91%. Bitcoin -6.%. Litecoin -10.1%. Ethereum -11.2%. Ripple -7.1%. Top Stock Gainers State Auto Finl Corp (NASDAQ:STFC) +191%. Red Cat Holdings Inc (OTCQB:RCAT)+137%. Datasea Inc (NASDAQ:DTSS) +71%. Bon Natural Life Limited (NASDAQ:BON)+63%. Mediaco Holding Inc Cl A (NASDAQ:MDIA) +62%. Top Stock Losers Precision Drilling Corp (NYSE:PDS) -17%. Amyris Inc (NASDAQ:AMRS) -17%. Cbdmd Inc (NYSE:YCBD) -17%. Bright Health Group Inc (NYSE:BHG) -17%. Englobal Corp (NASDAQ:ENG) -17%. Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.

​

 

[Bozzie]

[h=1]EU proposes end to the internal combustion engine in 2035[/h]
Jul. 15, 2021 5:31 AM ETGM, TSLA...Bayerische Motoren Werke Aktiengesellschaft (BAMXF), Bayerische Motoren Werke Aktiengesellschaft (BMWYY), Blink Charging Co. (BLNK)...By: Yoel Minkoff, SA News Editor769 Comments

Scharfsinn86/iStock via Getty Images

• Seeking Alpha reported on the discussions several weeks back, but the European Commission has now proposed a date to call time on the internal combustion engine. Sales of new cars and vans that produce CO2, including plug-in hybrids, would be banned as of 2035, meaning "almost 100%" of vehicles on the road would be emissions-free by 2050. While the decision would force the EV revolution upon European automakers, some are already planning moves of their own.
• Last month, Volkswagen (OTCPK:VWAGY) paved its way toward an EV future by pledging to halt sales of ICE vehicles in Europe by 2035, while Ford (NYSE:F) has said it will only sell EVs in Europe by 2030. Volvo (OTCPK:GELYF) is retiring the ICE engine and hybrids by the same year and Honda (NYSE:HMC) announced plans to phase out gas-powered cars by 2040. Meanwhile, Stellantis (NYSE:STLA) is no longer planning to invest in the development of new internal combustion engines, while General Motors (NYSE:GM) will stop building polluting vehicles by 2035.
• European Green Deal: "To ensure that drivers are able to charge or fuel their vehicles at a reliable network across Europe, the revised Alternative Fuels Infrastructure Regulation will require Member States to expand charging capacity in line with zero-emission car sales, and to install charging and fueling points at regular intervals on major highways: every 60 kilometers for electric charging and every 150 kilometers for hydrogen refueling," the European Commission said in a statement.
• Just don't catch fire... General Motors (GM) on Wednesday toldowners of 2017-2019 Bolt EVs not to park their vehicles inside or charge them unattended overnight after two of the vehicles went up in flames. The cars had even been repaired as part of a recall of 69,000 vehicles that were flagged for fire risks, but that didn't seem to help. Other EV rollouts have also been interrupted by fires involving lithium-ion batteries, including Ford, BMW and Hyundai (OTCPK:HYMTF), which have issued recalls in recent months for new battery-powered models.
• Are electric vehicles cleaner than gasoline cars? Deeper dive into the EV industry.

• Now read: GM to idle four North American plants that make midsize SUVs - report

Get alerts on
GM - General Motors CompanyFollow218.36K Followers

 

[Bozzie]

	Read in Browser
LISTEN TO TODAY'S PODCAST AVAILABLE AT 8AM ON:
Welcome to Wall Street Breakfast, our preview of stock market events for investors to watch during the upcoming week. You can also catch this article a day early by subscribing to the Stocks to Watch account for Saturday morning delivery. Outlook Economic reports in the week ahead Shutterstock​ The earnings season heats up in a big way next week with IBM (NYSE:IBM), Netflix (NASDAQ:NFLX), Chipotle (NYSE:CMG), Coca-Cola (NYSE:KO) and Twitter (NYSE:TWTR) just a few of the major companies due to spill numbers. Economic reports due out include updates on housing starts, construction data, existing home sales and the latest round of PMI numbers. Meanwhile, the event calendar features a show-and-tell from L Brands (NYSE:LB) ahead of the split of the Victoria's Secret and Bath & Body Works businesses. Cryptocurrency investors will be watching several Bitcoin conferences and all eyes in the electric vehicle sector will be on the splashy trading debut of Lucid Motors. Earnings Earnings spotlight: Monday, July 19th: AutoNation (NYSE:AN) and IBM (IBM). Earnings spotlight: Tuesday, July 20th: Travelers (NYSE:TRV), UBS (NYSE:UBS), Philip Morris International (NYSE:PM), Travelers (TRV), United Airlines (NASDAQ:UAL), Chipotle (CMG) and Netflix (NFLX). Earnings spotlight: Wednesday, July 21st: Verizon (NYSE:VZ), Johnson & Johnson (NYSE:JNJ), Coca-Cola (KO), Texas Instruments (NASDAQ:TXN) and Kinder Morgan (NYSE:KMI). Earnings spotlight: Thursday, July 22nd: AT&T (NYSE:T), Dow (NYSE:DOW), Abbott Labs (NYSE:ABT), American Airlines (NASDAQ:AAL), Intel (NASDAQ:INTC), Twitter (TWTR), Snap (NYSE:SNAP), VeriSign (NASDAQ:VRSN), Domino's Pizza (NYSE:DPZ) and Las Vegas Sands (NYSE:LVS). Earnings spotlight: Friday, July 23rd: American Express (NYSE:AXP), Honeywell (NASDAQ:HON) and Kimberly-Clark (NYSE:KMB). Sponsored By BlockFi Earn 1.5% back in Bitcoin on every purchase. Bitcoin was the best-performing asset of the decade, but not without its volatility. Instead of trying to time the market, crypto-curious investors now have a simpler alternative to gain Bitcoin exposure: earn it. The BlockFi Bitcoin Rewards Credit Card lets you earn 1.5% back in Bitcoin on every purchase. There are no fees* and you earn daily interest in crypto on your Bitcoin rewards. What about other cryptos? With Flex Interest Payments, you can get interest paid on your Bitcoin rewards in another crypto of your choice such as Ethereum, Litecoin, ChainLink, USD-backed stablecoins, and more. Start application *Terms Apply IPOs IPO watch: A very busy week is on tap for IPOs. Look for public debuts for Paycor HCM (PYCR), Vtex (VTEX), CS Disco (LAW) Kaltura (KLTR), Gambling Group (GAMB), Ryan Specialty Group (RYAN), Instructure (INST), Zenvia (NASDAQ:ZENV), Couchbase (BASE), Zevia (ZVIA) and Outbrain (OB). IPO lockup periods expire on MYT Netherlands (NYSE:MYTE), Dream Finders Homes (NASDAQ:DFH), RLX Technology (NYSE:RLX), Patria Investments (NASDAQ:PAX), Montauk Renewables (NASDAQ:MNTK) and Huadi International Group (NASDAQ:HUDI). The most notable quiet period expiration of the week may be for Chinese EV truck maker Full Truck Alliance (NYSE:YMM). M&A M&A tidbits: Shareholders with Enterprise Financial Services (NASDAQ:EFSC) vote on the merger with First Choice Bancorp (NASDAQ:FCBP) on July 20. The walk date on the Maxim Integrated (NASDAQ:MXIM)-Analog Devices (NASDAQ:ADI) deal is July 21. The HSR deadline on the Stamps.com (NASDAQ:STMP) go-private deal also arrives next week. Healthcare Healthcare watch: Catalyst Biosciences(NASDAQ:CBIO) is due to make poster presentations on marzaptacog alfa at the upcoming International Society on Thrombosis and Haemostatis Virtual Congress. The FDA action date arrives on Albireo Pharma's (NASDAQ:ALBO) odevixibat for Progressive familial intrahepatic cholestasis. The company is hoping for a launch in the second half of the year. The two-day Disease Prevention Control Summit 2021 begins with talks from FDA, CDC, World Health Organization officials as well as execs with Pfizer (NYSE:PFE), Adaptive Biotechnologies (NASDAQ:ADPT), Moderna (NASDAQ:MRNA) and Redhill Biopharma (NASDAQ:RDHL). Dividends Projected dividend increases (quarterly): A number of banks are expected to boost their dividend payouts next week. Projected dividend rates are forecast for Bank of America (NYSE:BAC) to $0.21 from $0.18, Northern Trust (NASDAQ:NTRS) to $0.75 from $0.70, Discover Financial (NYSE:DFS) to $0.47 from $0.44, Huntington Bancshares (NASDAQ:HBAN) to $0.16 from $0.15 and Comerica (NYSE:CMA) to $0.72 from $0.68. L Brands split: L Brands (LB) hosts a virtual investor meeting covering growth plans and strategies for Bath & Body Works and Victoria's Secret & Co. in advance of the planned separation of the two companies in August. JPMorgan is constructive on L Brands (LB) ahead of the event on the expectation that investor interest in the stock will increase before the split. Go Deeper Check out Seeking Alpha's Catalyst Watch for a detailed list of specific events to watch. Analysis Netflix earnings preview: Netflix (NFLX) is due to report earnings on July 20 with investors and analysts expected to have a sharper focus on the content schedule than the actual Q2 tallies. Into the report, Morgan Stanley highlights some risks for Netflix with Q2 and Q3 estimates due to a reopening consumer and the lingering effects of 2020 production delays, but reiterates an Overweight rating based on a positive view of the long-term path for the streamer. JPMorgan is also confident on Netflix and what it calls its strongest 6-month content slate ever. Fear Street and Money Heist are expected to be released by Netflix in Q3 and Cobra Kai and The Witcher in Q4. New seasons of Stranger Things, Ozark, The Crown and Bridgerton are anticipated in 2022. "Netflix remains the most used service, and we believe its breadth of originals supports long-term pricing power, notes KeyBanc Capital Markets analyst Justin Patterson on the content upside. ​ Events Chicago Auto Show: The Chicago Auto Show runs all weekend. The event at the downtown Chicago McCormick Place Convention Center is the first major auto show since the pandemic. Ford (NYSE:F) is showing off its electric F-150 Lightning and Mach-E, while other model introductions include the 2022 Jeep Compass, 2022 Volkswagen Golf GTI/R and Nissan (OTCPK:NSANY) Z Proto. Some of the automakers are allowing test drives of the featured models. Lucid steps out: Churchill Capital Corp IV (NYSE:CCIV) holds a special shareholder meeting to vote on the business combination with Lucid Motors (LUCIDM). The anticipated closing date for the business combination is July 23. The post-combination company will be renamed Lucid Group and trade on Nasdaq under the ticker symbol LCID. "Lucid has exceeded our expectations since announcing the merger at the end of February and is set to become a leading US technology and sustainable mobility company. We believe Lucid will take EVs to the next level with its proprietary technology and will provide attractive opportunities for Churchill investors," says Churchill Capital IV CEO Michael Klein. The Lucid Air Dream Edition is fully reserved and the company is on track for production and deliveries in the second half of 2021. Spotlight on Bitcoin: A number of events during the week will focus on Bitcoin (BTC-USD). ARK Invest is co-hosting a Bitcoin-focused initiative called the B Word that aims to demystify and destigmatize mainstream narratives about Bitcoin. The B Word event will feature live interviews with ARK Invest's Cathie Wood and Square's (NYSE:SQ) Jack Dorsey, as well as presentations from Lyn Alden (Lyn Alden Investment Strategy), Adam Back (Blockstream), Nic Carter (Castle Island Ventures), Michael Morrell (Beacon Global Strategies), Dr. Neha Narula (MIT Digital Currency Initiative), John Newbery (Brink), Anthony Pompliano (Pomp Investments) and more. The two-day REDeFiNE Tomorrow 2021 event focuses on various investment trends in digital assets. Riot Blockchain (NASDAQ:RIOT) CEO Jason Les is one of the speakers at a Bitcoin Mining event aimed at financial professionals. Corporate events: The Electronic Arts (NASDAQ:EA) EA Play Live event launches. The company has tipped off that new gameplay reveals will be part of the focus. Charles Schwab Corporation (NYSE:SCHW) holds its Summer Business Update call on July 22. On the same day, Mercedes-Benz hosts a strategy update event focused on e-mobility. The event could feature updates on the timing of the electrification of certain Mercedes models. Check out Seeking Alpha's Catalyst Watch for a detailed list of specific events to watch. Notable annual meetings: Constellation Brands (NYSE:STZ) on July 20. Genesco (NYSE:GCO) also a shareholder meeting on July 20 amid a proxy fight with Legion Partners on board nominees. Stock splits: The Ashford Hospitality Trust (NYSE:AHT) 1-for-10 stock split becomes effective on July 19. The Nvidia (NASDAQ:NVDA) 4-for-1 stock split and Shoe Carnival (NASDAQ:SCVL) 2-for-1 split also become effective next week. Stocks Barron's mentions: Academy Sports and Outdoors (NASDAQ:ASO) is profiled favorably after delivering three straight quarters of better-than-expected sales and profits. Valuation on ASO is called at 9X forward earnings, even after shares gained 75% in 2021 already. SAP SE (NYSE:SAP) is also seen as an attractive investment. Shares of SAP are seen playing catch-up to other software companies that have made the cloud transition. The Barron's Roundtable got together again to churn up some stock ideas. American Tower (NYSE:AMT), Cohu (NASDAQ:COHU), Masonite International (NYSE:DOOR), CNH Industrial (NYSE:CNHI), Madison Square Garden Sports (NYSE:MSGS), Splunk (NASDAQ:SPLK), RH(NYSE:RH) and Toyota (NYSE:TM) are just of the stocks some mentioned as potential bargains in a pricey market. Sources: EDGAR, Bloomberg, CNBC, Automotive News, Renaissance Capital

​

 

[Bozzie]

brutal morning...

July 19, 2021

Good morning. (Was this newsletter forwarded to you? Sign up here.)

Bill Ackman’s huge SPAC will have to find another target.Andrew Harnik/Associated Press

[h=2]On second thought …[/h]

When Bill Ackman’s jumbo-sized SPAC, Pershing Square Tontine Holdings, struck a deal last month to buy a 10 percent stake in Universal Music Group, it did so with a highly complex transaction that took a lot of explaining. Now, pushback from the S.E.C. has forced Ackman to change course.

A quick reminder of how the original deal was supposed to work:

The Pershing Square SPAC would have invested $4 billion to buy a 10 percent stake in Universal Music, which is home to artists like Taylor Swift and Ariana Grande and was already being taken public by its parent, Vivendi. The $1.5 billion left in the SPAC would have been rolled over into a new publicly traded acquisition fund that would have looked to do another deal. Existing SPAC investors would have gotten a financial instrument that gave them the right to buy into yet another deal vehicle, which would seek its own takeover target.

The S.E.C. had concerns, namely whether it qualified as a SPAC deal at all. In a letter to investors today, Ackman said his team had failed to change the agency’s mind over multiple meetings. It didn’t help that investors in the SPAC seemed wary, too: Shares in Pershing Square Tontine had lost nearly a fifth of their value since the deal was announced. “We underestimated the reaction that some of our shareholders would have to the transaction’s complexity and structure,” Ackman wrote.

Now it’s back to the drawing board. Ackman’s hedge fund will buy the Universal Music stake directly instead. Pershing Square Tontine now has 18 months to find and close a new deal, unless shareholders give it more time, and “our next business combination will be structured as a conventional SPAC merger,” Ackman added.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

Having got their heads around the Universal Music deal, will investors show relief or suspicion about the SPAC’s next move? Pershing Square Tontine’s shares are roughly back to their I.P.O. price, so it will be telling how they trade after the company’s pivot.

This is the latest sign of regulators reining in the SPAC market, making clear that they’re worried about protecting investors in those funds, which have boomed over the past year. Federal prosecutors and the S.E.C. are investigating Lordstown Motors, the electric truck maker that went public via SPAC and issued confusing information about its orders. The S.E.C. has charged the space travel company Momentus and its SPAC partner with misleading investors.

For all its complexity, Ackman’s SPAC was pitched as particularly friendly for investors, without the typical compensation for sponsors that has attracted criticism and regulatory scrutiny. Its deal with Universal Music also didn’t come with the overly rosy financial projections that mark many SPAC deals. In going after Ackman’s multilayered transaction, regulators appear to signal that they want SPACs to stick with a plain-vanilla approach.

[h=3]HERE’S WHAT’S HAPPENING[/h]

England’s first day without pandemic restrictions is off to a rocky start.Hailed by tabloids as “Freedom Day,” today’s lifting of most virus-related limitshas been marked by surging cases and staff shortages because of people self-isolating after being pinged by a government track-and-trace app. (Prime Minister Boris Johnson is among those in a 10-day quarantine.)

OPEC and Russia clinched a deal to increase oil production. The countries will pump more oil next month, increasing worldwide supplies by 2 percent. But supplies are likely to remain tight until at least the fall, analysts said.

Robinhood aims for a $35 billion valuation in its I.P.O. The online trading app revealed an expected price range for its market debut, kicking off a roadshow to prospective investors. That puts the company on track to begin trading next week.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

An Israeli spyware maker is linked to hacking of activists, reporters and executives. An investigation unearthed 50,000 phone numbers associated with people of interest to clients of NSO Group, and attempts were made to break into dozens of smartphones from the list. NSO, which has been criticizedfor ties to authoritarian governments, denied wrongdoing.

Zoom makes a $15 billion bet on … phone calls. The videoconferencing company will buy Five9, a call-center operator, in its biggest acquisition to date. Zoom is looking beyond its core market as rivals muscle in on its turf.

[h=2]Zegna gets a blank check to grow globally[/h]

In other news from the SPAC world, the luxury menswear brand Ermenegildo Zegna plans to end over a century of complete family control this morning by going public via a SPAC. It, like other high fashion companies, is bulking up as it bets that well-heeled customers will keep spending.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

The company wanted capital to expand. Zegna will trade on the New York Stock Exchange by merging with a blank-check fund run by the European investment firm Investindustrial, gaining both $880 million in fresh cash and access to the capital markets to raise more. Gildo Zegna, its C.E.O. and the grandson of the company’s founder, made clear that M.&A. is in the company’s future: “We want to consolidate,” he said on a call with journalists this morning.

The backstory: The Zegna family was approached by the SPAC’s chairman, the former UBS chief executive Sergio Ermotti, in January. Before then, Gildo Zegna said, the company had been content to stay private: “There was not a competition between a SPAC and an I.P.O.”

Other luxury houses have been doing deals, too. LVMH bought Tiffany & Company earlier this year, while L Catterton, an investment fund backed by LVMH, is reportedly in talks to buy the label Etro. And both Capri Holdings (the former Michael Kors) and Tapestry (the onetime Coach) have struck acquisitions in recent years.

[h=2]“I think if you define fairness by ‘fair market value,’ then C.E.O.s are paid fairly. I think if you define fairness by how you think society should value people, then I think C.E.O.s are paid too much.[/h]

— Dara Khosrowshahi, the C.E.O. of Uber, in an interview with Times Opinion columnist Maureen Dowd.

[h=2]The week ahead[/h]

▶︎ Another billionaire goes to space. On Tuesday, Jeff Bezos is expected to become the second billionaire rocket company founder to go to space this month. (Richard Branson beat him by nine days.) The billionaires’ trips are a small step toward a new frontier for tourism — and liability insurance.

▶︎ Earnings reports from United, Southwest and American Airlines will serve as a progress report for postpandemic travel. Delta Air Lines, which last week reported its first profit since the start of the pandemic, said domestic leisure travel had fully recovered. But there’s still a big question over whether business travel will ever be the same.

▶︎ The spectator-less Olympics start on Friday. Over the weekend, organizers reported the first cases inside the athletes’ village. Toyota, a major sponsor, said today that it would cancel its Olympic-related TV ads in Japan, as public opinion turns against the event. Hosting the Olympics rarely pays off for cities in the best of times, but it is shaping up to be particularly costly for Tokyo.

[h=2]Is Facebook ‘killing people’?[/h]

President Biden on Friday told reporters that social media platforms are “killing people” by allowing vaccine disinformation to proliferate. The highly contagious Delta variant has fueled an uptick in cases, especially in places with low vaccination rates. Frustration with Facebook has grown after recent meetings between White House officials and company executives.

Facebook said it is a scapegoat for Biden’s missed vaccination goals. Guy Rosen, a Facebook vice president, wrote a lengthy blog post over the weekend entitled “Moving Past the Finger Pointing.” Among other things, he said that 85 percent of users in the U.S. “have or want to be” vaccinated, though some questioned the company’s numbers.

It’s complicated. As Kara Swisher noted in a Times Opinion column, Facebook is a gateway to both helpful and hurtful information, “presenting clearly solid information about Covid, as well as a place where an enormous flood of lies about it has overwhelmed the same zone.” Are the posts and videos that Facebook users see changing minds or reinforcing priors? We don’t know from the data released thus far, and the balance of celebration and scorn depends on it.

[h=2]WeWork’s chicken problem[/h]

Masa Son, the head of SoftBank, once sent Adam Neumann, the founder and head of WeWork at the time, a picture of Yoda on which he had scribbled, “Chicken First!!” That odd piece of encouragement is just one of the eye-catching details in an excerpt from the new book, “The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion.”

Some of the other juicy anecdotes from the book — here is The Times’s review— written by The Wall Street Journal reporters Eliot Brown and Maureen Farrell:

Neumann said he needed $70 billion in funding to achieve his growth goals, several times more than any start-up had raised before. Neumann told aides he wanted WeWork to buy the ride-sharing company Lyft, and held discussions to acquire the restaurant chain Sweetgreen. Neumann wanted his contract with the company to say he could retain control of the company even if he were sent to jail for committing a felony.

Son’s cryptic message referred to the perennial chicken-and-egg question. Unmet demand is typically what hatches a new business idea. But Son advised Neumann that if he could show customers what a fully grown chicken looked like first, demand would follow. At the time, Neuman was expanding the company into things like yacht charters (WeSail) and preschools (WeGrow).

The result was a zoo. Son backed out of a key financing deal. Neumann got the boot. Then the pandemic hit and WeWork’s value plunged. One of the lessons is that breaking the rules of business is not always a recipe for success.

Want to share The New York Times with your friends and family? Invite them to enjoy unlimited digital access to our journalism with this special offer.

[h=3]THE SPEED READ[/h]

Deals

Johnson & Johnson is said to be weighing whether to use bankruptcy laws to shield itself from lawsuits over talc products. (Reuters) China reportedly plans to exempt companies going public in Hong Kong from the cybersecurity reviews that tripped up Didi Chuxing. (Bloomberg) Is this medical lawsuit company, which is going public via a SPAC, really worth $33 billion? (FT)

Policy

The White House is expected to formally accuse the Chinese government of hacking Microsoft email systems used by thousands of institutions. (NYT) Treasury Secretary Janet Yellen will meet with other regulators today to discuss the benefits and risks of stablecoins. (WSJ) “What China Expects From Businesses: Total Surrender” (NYT) The failure of a Chinese semiconductor company shows the limits of Beijing’s support for would-be national tech champions. (NYT)

Best of the rest

“What Ever Happened to IBM’s Watson?” (NYT) Two Americans convicted of helping smuggle Carlos Ghosn out of Japan were each sentenced to over a year in prison. (NYT) Britain’s biggest divorce case has ended with a $186 million settlement. (Bloomberg) Curtis Sittenfeld’s latest short story: The fictional tale of a babysitter working for a family that looks a lot like a real-life billionaire clan. (The Atlantic)

 

[Bozzie]

	Read in Browser
LISTEN TO TODAY'S PODCAST AVAILABLE AT 8AM ON:
Top News Delta fears Shutterstock​ It's "Freedom Day" in the U.K., which just lifted the majority of its remaining coronavirus restrictions, but investors seem to be more nervous there, as well as across the globe. The rise of the rapidly spreading Delta variant is threatening to derail many efforts towards a full economic reopening as worsening outbreaks continue to cloud the once-promising outlook. U.S. stock index futures are also joining the global selloff after the major averages posted their first negative week in four: Dow -1.1%; S&P 500 -0.8%; Nasdaq -0.4%. Mixed feelings: "If we don't do it now we've got to ask ourselves, when will we ever do it? This is the right moment, but we've got to do it cautiously," British Prime Minister Boris Johnson said in a statement. It's a continuing argument that's playing out worldwide. Some have warned that hospitalizations could rise substantially over the coming weeks, jeopardizing the progress made in containing the pandemic, while others have put more of a focus on personal responsibility, saying there were worse consequences for the economy, livelihoods and mental health. Just weeks after they celebrated their "Freedom Days," the Netherlands and Israel reimposed COVID restrictions as Delta variant cases rose throughout the countries. Over in Australia, Sydney and Melbourne are tightening lockdowns, while more athletes are testing positive for COVID-19 upon arrival in Japan, challenging the Tokyo Olympics in a region that just declared a coronavirus state of emergency. In the U.S., more states are also reinstating restrictions that had been lifted since late April, including Arizona, California, Colorado, Florida, Louisiana, Michigan, New Mexico and Texas. Go deeper: Delta isn't the only thing weighing on investors' minds. Inflation fears resurfaced on Friday after data from the University of Michigan showed that consumers believed prices would jump 4.8% over the next year, marking the steepest climb since August 2008. There's also worries about a peak in economic activity, tapering talk, the Q2 earnings season and whether the bullish sentiment in markets has reached a tipping point. Covid War of words Facebook (FB) is pulling out the big guns following continuous comments from the Biden administration over coronavirus vaccine misinformation. On Saturday, the president told reporters the social media networks are "killing people," while press secretary Jen Psaki said that health misinformation is "leading to people not taking the vaccine, and people are dying as a result." Surgeon General Dr. Vivek Murthy has even called online vaccine misinformation "an urgent threat to public health" in his first formal advisory. Response from FB: "At a time when COVID-19 cases are rising in America, the Biden administration has chosen to blame a handful of American social media companies. While social media plays an important role in society, it is clear that we need a whole of society approach to end this pandemic. And facts - not allegations - should help inform that effort." Doesn't stop there: Facebook cites data that shows 85% of users in the U.S. have been or want to be vaccinated against COVID-19. "President Biden's goal was for 70% of Americans to be vaccinated by July 4. Facebook is not the reason this goal was missed," reads a zinger from Guy Rosen, Facebook's VP of Integrity. According to the CDC, deaths from COVID-19 are rising again in the U.S. as Delta hits largely unvaccinated pockets of the country (American vaccinations averaged 530K per day over the past week). (375 comments) Sponsored Catalyst to $1 Trillion in Growth? You don’t have to be a hedge fund guru to know that markets can rise and fall quickly (Dogecoin anybody?). Sometimes, the most attractive growth can be found in some of the oldest of places. Despite being hundreds of years old, the art market is poised for tremendous market capitalization growth. Deloitte projects the total wealth held in art and collectibles to expand from $1.7T to $2.7T by 2026. We largely attribute this to the rise of securitized assets, opening the doors to the art market for all. Founded in 2017, Masterworks.io is the leading platform for blue-chip art investing with over 185,000 registered users. They have acquired over $150MM in art from artists like Banksy, Basquiat and Haring with new offerings launching every week. Unlock this asset class today.* *See important disclaimer Energy OPEC+ ends standoff OPEC and its allies have reached a deal to raise crude production in response to "oil demand showing clear signs of improvement and OECD stocks falling." Starting in August, they'll pump out an extra 400K barrels a day through the end of 2022, restoring all the cuts they made at the start of the COVID-19 pandemic. The modest increase suggests that producers are still concerned about the strength of the global economic recovery, but that they're comfortable with the current price of crude. Bigger picture: The deal resolves an internal dispute that had tested the unity of the alliance. OPEC+ abandoned talks two weeks ago after the UAE rejected proposed production plans, saying its current baseline was too low. The new agreement saw OPEC leader Saudi Arabia meet the UAE halfway in its demand for a more generous output limit, with other members of the group also being awarded higher production baselines, or the level at which output deals are calculated. Brent crude futures (CO1:COM) fell 2.7% to $71.64/bbl on the news, while WTI crude (CL1:COM) slipped 2.9% to $69.49/bbl. "The deal reached over the weekend is likely to lead to some further weakness in the short term, as investors unwind positions on the prospects of higher supply," wrote Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group. "Ultimately, the market is still relatively tight, which should see a relatively short-lived selloff." Back on board: "We appreciate the constructive dialogue we had with his highness and OPEC," Emirati Energy Minister Suhail Al Mazrouei told journalists, referring to Saudi Energy Minister Prince Abdulaziz bin Salman. "I confirm that the UAE is committed to this group and will always work with it and within this group to do our best to achieve the market balance and help everyone. The UAE will remain a committed member in the OPEC alliance." (5 comments) M&A Big deal Zoom (ZM) became a household name during the pandemic as video conferencing became all the more important in a world without social contact. The company even saw explosive revenue growth of 326% in 2020, given the shift to remote work and distance schooling. As the economy reopens amid a broad vaccine rollout, some of those streams drying up and organic growth is unlikely to placate Wall Street. The stock has eventumbled 36% since reaching its peak in October after surging nearly 400% last year. Where does the company turn? Zoom is spending big on M&A, scooping up Five9 (FIVN) in an all-stock transaction that values the company at $14.7B. Five9 is a provider of cloud-based call center technology, which allows representatives to do their jobs from home. The transaction is expected to close in the first half of 2022, though Five9 stockholders still have to approve the deal and it will require regulatory clearance. FIVN +8% premarket. "We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers," Zoom CEO Eric Yuan declared. The acquisition is Zoom's first billion-dollar purchase and is the second-largest U.S. tech deal this year, behind Microsoft's (MSFT) planned $16B deal for Nuance Communications (NUAN). Cisco in the mix: Zoom CEO Eric Yuan, who founded Zoom in 2011, helped build WebEx, which Cisco (CSCO) bought in 2007 for $3.2B (he ended up staying at Cisco until he left to start Zoom). Five9 CEO Rowan Trollope also joined Cisco in 2012, and eventually became in charge of all of Cisco's collaboration products (some even saw him as the top deputy to CEO Chuck Robbins). Trollope left the networking giant to take the CEO role at Five9 in 2018, and will remain CEO under the new deal, as well as president of Zoom. (18 comments) Today's Markets In Asia, Japan -1.3%. Hong Kong -2.2%. China flat. India -1.1%. In Europe, at midday, London -2.1%. Paris -2.1%. Frankfurt -2%. Futures at 6:20, Dow -1.1%. S&P -0.8%. Nasdaq -0.4%. Crude -2.9% at $69.49. Gold -0.7% at $1802.90. Bitcoin -1% at $31327. Ten-year Treasury Yield -4 bps to 1.26% Today's Economic Calendar 10:00 NAHB Housing Market Index What else is happening... J&J (NYSE:JNJ) may put talc liabilities into unit that files for bankruptcy. Hedge funds shun Netflix (NASDAQ:NFLX) and Facebook (NASDAQ:FB) - Sector Watch. SPX Flow (NYSE:FLOW) rebuffs Ingersoll Rand (NYSE:IR) takeover bids - WSJ. Tesla (NASDAQ:TSLA) stands out in BofA list of best covered call options plays. Interest in "shroom stocks" rises over potential for psychedelic therapy. Merck (NYSE:MRK) wins FDA approval for new pneumonia vaccine. AMC Networks (NASDAQ:AMCX) settles Walking Dead producer lawsuit for $200M. Investors eagerly await Slack (NYSE:WORK)-Salesforce (NYSE:CRM) DOJ approval. Falling to Earth... Virgin Galactic (NYSE:SPCE) swaps gainer tag for top loser. Space race: Procure Space ETF (UFO) vs. ARK Space Exploration ETF (ARKX).

​

 

[Bozzie]

Global Market Comments
July 19, 2021
Fiat LuxFeatured Trade:(MARKET OUTLOOK FOR THE WEEK AHEAD, or THE DELTA CORRECTION IS HERE)
(AMZN), (AAPL), (FB), (MSFT), (TAN), (FSLR)

​

​

The Market Outlook for the Week Ahead, or The Delta Correction is HereRight now, the fate of your investment portfolio, and indeed your life, is in the hands of a minority of anti vaxers in the Midwest.

If the surge in the delta variant burns out in weeks or a month, the current market correction won’t extend any more than 5% and you should be loading the boat with big tech stocks like (AMZN), (AAPL), (FB), and (MSFT).

The delta variant is becoming a big deal, with unvaccinated states like Arkansas (35% vaccination rate) and Missouri (40% rate) driving the resurgence. It is essentially an epidemic of the unvaccinated.

Unless checked, it could lead to a broader stock market selloff in August. Los Angeles brought back the indoor mask mandate on Saturday, although compliance is near zero. San Francisco may be close behind.

Everyone in my company worldwide is now vaccinated, with Australia last to get one. I’ll be first in line for the Pfizer booster out in the fall. Delta is twice as contagious, more fatal, with more permanent side effects than earlier variants. And it’s killing more kids.

But it’s not the delta you have to worry about. If a future epsilon or zetavariant emerges, that can overcome our current vaccines, bred in the Midwest, the economy would shut down again and you can kiss your bull market goodbye. That would lead to a 1918 style finish to this pandemic, the fatality rate would go up to 50%, and millions more would die.

I’ll stick to the optimistic case….for now.

Even if we get a new variant, we now have the infrastructure in place to sequence the DNA of a new strain in a day and have 100 million doses in the freezer in two months. But it could be a close-run thing.

If you want to stick with your long portfolio in the face of millions dying here is the argument.

The Fed is unable to stimulate the economy any further through interest rate cuts or more QE. It is like pushing on a string. Companies can’t hire the labor they need to increase production or obtain the parts to make things.

This ends in August when workers get their free childcare back in the form of the public school system. The ending of Covid benefits will also light a fire under them. This will lead to a collapse in the unemployment rate and a further rise in GDP from the current ballistic 7.0% rate. This will allow the Fed to raise rates, but not enough to hurt stocks, especially techs.

This is your Goldilocks scenario for H2.

Driving down from Lake Tahoe to Long Beach to pick up my kids from Scout Camp, I passed two huge wildfires. Half the vehicles on the road (US 395) were fire trucks and crews moving in from other states. It’s like being at war.

So, you might ask the question of when will Climate Change affect the stock market? The answer is that Climate Change is actually great for stocks. Money gets spent to put fires out, then trillions of dollars get spent to rebuild with insurance claims.

The biggest impact of climate change is the decarbonization of our energy infrastructure, out of fossil fuels and into alternatives. Solar will soar from 20% to 70% of total electric power output in a decade while nuclear stays at 20% and hydroelectric at 10%. Coal and oil completely disappear. This will enable a large cut in our total energy bill.

Yes, I know oil has rallied lately. I’m sure American Leather had rallied on the way to zero, the only Dow stock to ever completely disappear. It was wiped out by the transition from horses to cars, eliminating 97% of the demand for leather. (The horse population went from 120 million to only 3.8 million today).

There are ways to play this today. Solar growth will be massive, so you have to look at the Invesco Solar ETF (TAN) and First Solar (FSLR).

Here is the next market top, at least for the short term. That’s because, for the last year, stocks have a nasty habit of selling off after quarterly earnings reports, which are just around the corner. Announcement dates for the FANGS are below. For the short term, you want to sell days before the reports. For the long term, you want to keep them, as I expect all to double or more in the next three years.

Facebook (FB) is July 28, 2021
Alphabet (GOOGL) - Jul 25, 2021
Apple (AAPL) Jul 27, 2021
Amazon (AMZN) Jul 26, 2021
Netflix (NFLX) Jul 20, 2021
Microsoft (MSFT) - Jul 28, 2021

China’s economy is slowing, with the post-Covid bounce over. It just provided $154 billion in stimulus for its economy and cut bank reserve requirements by 50 basis points. If they slow there, we could slow here, especially for big exporters to China in the ags.

Core CPI jumps to 5.4%, the biggest gain in 13 years. Excluding food and energy, it’s the biggest print since 1991. The Fed is holding its breath that these large numbers are temporary. Used car and truck prices accounted for a third of the gain for the second month in a row. That is certainly not sustainable, or I’m going into the used car business. Tech took off like a rocket on the news.

Producer prices show biggest gain since 2008, the is index up a hot 1.0% in June against 0.8% in May. PPI is up 7.3% YOY. Higher commodity and labor costs against shrinking inventories were the big issues. Inflationary pressures are here, but for how long?

Senate agrees to $3.5 trillion spending plan, providing great news for stocks and terrible news for bonds. No Republican support is required. This is in addition to the $579 billion infrastructure deal reach with opposition support. It’s enough dosh to keep this stock market percolating for years. Buy FANGS on dips.

Any tightening is a ways off, says Fed governor Jerome Powell in his congressional testimony, sending bonds soaring. The comment was in response to the superheated 5.4% CPI print on Tuesday. The $120 billion a month in Fed bond buying continues. Big tech loved it and continued with its non-stop rally. The rocket fuel for share prices continues unabated.

The four biggest US banks deliver spectacular earnings, posting a combined $33 billion in profits, triggering the predictable selloff. That is $9 billion above analyst forecasts, which seem to be a permanent lagging indicator. Consumer spending is exceeding pre-pandemic levels, credit quality is soaring, and credit card spending is through the roof. Buy (JPM), (BAC), and (V) on dips.

US retail sales come rocketing back, with customers spending those stimulus checks hand over fist. The 0.6% gain in June came on the heels of a 1.7% drop in May. Vaccinations are driving buyers back into the stores. Electronics stores, clothing, and restaurants saw the biggest increases.

Bank of America lowers US GDP from 7.0% to 6.5%, still the whitest hot numbers in history. 2022 is looking like 5.5%, still double the pre-pandemic rate. Personally, I think these numbers are low, and the stock market thinks so too. Keep buying dips in the good names.

Investors pouring out of bonds and into stocks, according to a survey of mutual fund flows last week. I couldn’t agree more. The Fed can’t keep holding on to zero rates forever, and when their turn comes, its will be brutal.
My Ten Year View
When we come out the other side of pandemic, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. With interest rates still at zero, oil cheap, there will be no reason not to. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The American coming out the other side of the pandemic will be far more efficient and profitable than the old. Dow 240,000 here we come!

My Mad Hedge Global Trading Dispatch profit reached a 1.84% gain so far in July. My 2021 year-to-date performance appreciated to 70.44%. The Dow Average is up 13.35% so far in 2021.

I spent the week running my two last positions, a long in (JPM) and a short in the (TLT) into the July 16 options expiration. Both expired at max profit. I then immediately strapped on a new short in the (SPY), my first since the pandemic began. That leaves me 90% in cash. I’m keeping positions small as long as we are at extreme overbought conditions.

That brings my 11-year total return to 492.99%, some 2.00 times the S&P 500 (SPX) over the same period. My 12-year average annualized return now stands at an unbelievable 42.56%, easily the highest in the industry.

My trailing one-year return exploded to positively eye-popping 108.94%. I truly have to pinch myself when I see numbers like this. I bet many of you are making the biggest money of your long lives.

We need to keep an eye on the number of US Coronavirus cases at 34.1 million and deaths topping 609,000, which you can find here.

The coming week will be a weak one on the data front.

On Monday, July 19 at 11:00 AM, the NAHB Housing Market Index for July is out. Johnson & Johnson (JNJ) and Verizon (VZ) report.
On Tuesday, July 20, at 8:30 AM, Housing Starts for June are printed. Haliburton (HAL) and United Airlines (UAL) report.
On Wednesday, July 21 at 11:30 AM, EIA Crude Oil Stocks are announced. Netgear (NTGR) reports.
On Thursday, July 22 at 8:30 AM, we learn the latest Weekly Jobless Claims. At 11:00 AM, we get Existing Home Sales for June. American Airlines (AAL) and Biogen (BIIB) report.
On Friday, July 23 at 2:00 PM, we learn the Baker-Hughes Rig Count. American Express (AXP) reports.

As for me, we all had to rearrange our budgets in the last year, dumping old spending habits and adopting new ones.
As for me, my electric scooter bill with Lime (click here for the site) has gone through the roof. They neatly fill the gap between walking and Uber in major tourist areas like Long Beach.

It’s a lot of fun, provided you don’t kill yourself on your first ride. The scooters go fast, some 20 miles an hour. Each one has a 13-mile range. When you’re done, you just drop it, take its picture, and then Lime picks it up and recharges it overnight.

I think I broke all seven of their mandatory rules (no driving on sidewalks, driving without a helmet, drinking while driving….). Hey, the great thing about being my age is that there are no long-term consequences to anything.

Stay healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

Check Out My New Wheels

Here is the Problem​

​

​

​

​

​

​

Quote of the Day“The Fed only knows two speeds; too fast, and too slow,” said Nobel Prize-winning economist Milton Friedman to me over lunch one day.

​

 

[CoachCB]

17 on the Profit Predictor is the lowest I've seen it since I've been following this thread....

 

[Bozzie]

17 on the Profit Predictor is the lowest I've seen it since I've been following this thread....

As low as I've seen it in a good while.

DEALBOOK NEWSLETTER

Why the Markets Worry About the Delta Variant


Investors worry about the long path back to normality.

• 
  
• 
  
• 
  
• 
  
  

By Andrew Ross Sorkin, Jason Karaian, Sarah Kessler, Stephen Gandel, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni



July 20, 2021Updated 8:26 a.m. ET

​

Image

Image

Traders have the Delta variant on their minds.Credit...Richard Drew/Associated Press

The market is not immune to the Delta variant

Last week, analysts at Goldman Sachs told clients that the potential economic impact of the Delta variant of the coronavirus would be “modest.” Even if that turns out to be the case, investors look nervous as infections spread because of the highly contagious strain.
Yesterday, the S&P 500 recorded its steepest one-day drop since May and European stocks had their worst day of the year. Inflation and antitrust enforcement had been worries for investors, but “I don’t see those things as what is driving the drop,” said Chris Brightman, who runs the money management firm Research Affiliates.
The drop caught some by surprise, because stocks have generally been resistant to the coronavirus. The S&P 500 index is 25 percent higher than it was before the pandemic. Economies have adapted, some companies have benefited, and government stimulus has protected the finances of many individuals and small businesses.
Most companies don’t seem to be altering their hiring or investment plans — yet. A private equity executive told DealBook that further lockdowns have been in the “tree of options” that companies have planned for, and the probability is now higher than before. Business leaders and investors in the U.S. are also getting clues from the “test case” of Britain, where the Delta variant has been spreading for several weeks, the person said. England lifted most of its pandemic restrictions yesterday, but the mood there remains cautious.

ADVERTISEMENT

Continue reading the main story


​

One reason U.S. investors are nervous is the price of oil, which dropped nearly 8 percent on Monday. Rising oil prices had been seen as a sign of a strong global rebound. The sharp decline, seemingly out of line with a modest increase in supply from oil-producing countries announced over the weekend, suggests that the global demand for oil, and therefore economic activity, could be lower than thought.

Image





Bond markets also reflect economic unease. The economically sensitive 10-year Treasury yield has fallen to its lowest level since February, a time when the prospects for a pandemic recovery were far less certain. This is also a worry for stock investors. “You’ve had this sharp drop in bond yields, which the investment community is struggling to explain,” said Lori Calvasina of RBC Capital. “The equity world is confused by it, and concerned about it.”
There’s less confidence that Washington will come to the rescue again. Gridlock has made it difficult for Congress to pass an infrastructure bill. Many states want to end expanded unemployment benefits. A number of other pandemic safety net programs are about to expire. And the Fed is under pressure to raise rates to stem rising inflation. “A lot of the success was the coordinated policy from the Fed and the Treasury,” Brightman said. “Now, it looks like all of those extraordinary policies are coming to an end.”

Things are looking up, a little, in early trading today. Stocks are clawing back some of yesterday’s rout. But the dip may cause investors to take a closer look at whether current stock prices, still near all-time highs, are warranted given rising Covid cases and slowing vaccinations. “Although bargain hunters will be sniffing around, nervousness is still largely the sentiment rippling through the markets,” Susannah Streeter of Hargreaves Lansdown wrote in a note.​

Image

HERE’S WHAT’S HAPPENING

The pandemic recession was the shortest on record. The economic decline officially lasted just two months and ended in April 2020, according to arbiters at the National Bureau of Economic Research. That doesn’t mean the economy has fully recovered, though: The U.S. still has almost seven million fewer jobs than before the pandemic.
Amazon will stop Covid testing at its U.S. warehouses. The company told employees that they can now rely on other testing services, The Information reports. The move, which is said to also include the phase-out of other protective measures, comes as cases are surging and vaccination rates remain low in many of the states where Amazon has warehouses.
China rejects Western accusations of state-led hacking. Chinese diplomats accused countries including the U.S. and Canada of smearing Beijing by alleging ties to cyberattacks, including one on Microsoft. Relatedly, here’s how China has strengthened its cyberhacking capabilities, according to U.S. intelligence officials.
Daily Business Briefing
Latest Updates

Updated July 20, 2021, 10:01 a.m. ET2 hours ago
2 hours ago

• Hollywood studios can mandate that everyone on a set be vaccinated.
• The latest on Jeff Bezos and his Blue Origin spaceflight.
• Democrats take aim at a business tax break included in Trump’s 2017 overhaul.

Opioid distributors near a $21 billion settlement.AmerisourceBergen, Cardinal Health and McKesson would set aside funds to resolve litigation by state and local governments. The potential deal must still be approved by a majority of those filing suit.
Today is Jeff Bezos’s launch day. The Amazon founder will lift off in a rocket operated by his New Origin space company at 9 a.m. Eastern, hoping to join Richard Branson in the space-faring billionaires’ club. Follow The Times’s live coverage of the launch here.

Image

ADVERTISEMENT

Continue reading the main story


​

PwC may sell its unit advising companies on a global work force

As the geography of a post-pandemic work force begins to take shape, the professional services giant PwC has tapped Morgan Stanley to sell its “global mobility” division, DealBook hears. The unit, which generates $200 million in operating earnings, advises companies on policies for a remote work force, deals with immigration issues and helps with global tax planning.
As many companies adopt hybrid models — and some go fully remote — advice on managing a distributed work force is more in demand. A spokeswoman for PwC said the firm does not comment on “rumors or speculation about any changes to our portfolio.” Morgan Stanley declined to comment.
PwC announced a major reorganization in June. The firm consolidated its operations into two units: “Trust Solutions,” to house its accounting and tax businesses, and “Consulting Solutions” for its advisory services offerings. As part of that revamp, PwC also announced plans to invest $12 billion in recruiting, training and technology and to hire 100,000 new workers by 2026.
PwC has tried on different shapes over the years. It sold its consulting arm to IBM for $3.5 billion in 2002 amid regulatory pressure on accounting firms to separate consulting from auditing, but rebuilt that business through acquisitions as it lost ground to rivals. (Regulators are once again scrutinizing the Big Four, which includes PwC, on their balance of accounting and consulting services.) PwC recorded $43 billion in sales in its latest fiscal year, with just over 40 percent from auditing, about 35 percent from consulting and 25 percent from tax and legal services.

---

“I had some tough stretches coming up, but absolutely nothing like what you’ve just been through.”

— Ananya Das, a managing director at Guggenheim Securities, in a LinkedIn post that takes a different approach to advertising jobs for junior bankers, who often feel overworked and expendable, especially during the pandemic. “I imagine you to be unflappable,” she added, “a bunch of diamonds created under immense pressure and I tip my hat as I would not have survived.”

---

ADVERTISEMENT

Continue reading the main story


​

Image

Corporations get back to business with political donations

Shortly after the Capitol riot on Jan. 6, hundreds of big companies said that they would suspend political donations, either in total or specifically to the Republican lawmakers who voted against certifying the presidential election. Now, many of those companies have begun giving again to Democrats and to many of the Republican objectors.
Revelations about corporate political donations have emerged over the past week as candidates and companies have disclosed their latest filings. Here are some noteworthy developments:
In the first six months of the year, Lockheed Martin donated to 53 Republican members of Congress who voted against certifying the presidential election, according to the newsletter Popular Information. That was the most of any corporate PAC since the Capitol riot. Among those to receive money from Lockheed were Representative Andrew Clyde of Georgia, who The Times has reported is among the most vocal in trying to reframe the riot as nonviolent.
The House minority leader, Representative Kevin McCarthy of California, raised over $500,000 from the PACs of more than 60 corporations and business groups in the second quarter. Among the companies giving money to McCarthy that had pledged to pause contributions were Abbott Laboratories, Ford and UPS, according to The Hill.
Nearly three dozen companies have kept their pledges to stop donations to Republican objectors. Those include Amazon, Disney, Google, Microsoft and Morgan Stanley, according to Popular Information. And even among the companies that are giving again, as a group they have become less generous, The Wall Street Journal reports. It’s worth noting that these numbers include only donations made directly from corporate PACs. As DealBook has explained, companies can direct their money to candidates or political parties in many ways that are nearly impossible to track.

Image

THE SPEED READ

Deals

• Apollo Global Management said it was in talks to partner with Fortress to buy Morrisons, the British supermarket chain. (FT)
• In I.P.O. news: The language-learning app Duolingo is aiming for a $3.4 billion valuation, while the clothing rental service Rent the Runway said it had confidentially filed to go public. (Reuters, Bloomberg)
• LVMH agreed to buy a majority stake in Off-White, the streetwear brand run by Virgil Abloh, and give him a bigger role at the French fashion conglomerate. (NYT)
• Generate Capital, a big investor in green energy, raised $2 billion for its latest and largest fundraising. (WSJ)

Policy

• A deep dive into how the F.D.A. approved a pricey and controversial Alzheimer’s drug despite misgivings from its own officials. (NYT)
• Twitter temporarily suspended the account of Representative Marjorie Taylor Greene, Republican of Georgia, for spreading misinformation about the coronavirus. (NYT)
• Treasury Secretary Janet Yellen urged fellow regulators to act quickly in regulating the fast-growing stablecoin industry. (NYT)
• Government-linked hacking has become a widespread and perhaps long-lasting feature of the global order. (NYT)

Tokyo Olympics

• How Dentsu became an unseen force behind the Olympics — and why the advertising giant is poised to miss out on an expected windfall. (NYT)
• Dick Pound, a member of the International Olympic Committee, says that the I.O.C. shouldn’t be held responsible for a Covid outbreak at the games. (Times Opinion)
• Why the beds in the athletes’ village are made of cardboard. (NYT)
• “A Goldman Sachs Analyst by Day, He Helped Pitch Israeli Baseball Into the Olympics” (WSJ)

Best of the rest

• Hacks using Israeli spyware show that Apple’s claims about iPhone security don’t live up to reality. (WaPo)
• Leon Black shed a surprising amount of light on his personal life in rebutting accusations of sexual assault. (Bloomberg)
• Entrepreneurs are holding “business showers” — like baby showers, but for newly formed start-ups. (NYT)
• Workers are returning to the office, but the golden age of food trucks may be over. (NYT)

Image

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.

 

[Bozzie]

ufffffff....

https://fortune.com/2021/07/20/bitcoin-price-btc-crash-tesla-gains-tsla-stock/

 

[Bozzie]

Global Market Comments July 20, 2021 Fiat Lux Featured Trade: (SHOPPING FOR FIRE INSURANCE IN A HURRICANE) (VIX), (VXX), (XIV) (THE ABCs OF THE VIX) (VIX), (VXX), (SVXY)

​ Shopping for Fire Insurance During a HurricaneWith the Volatility Index back down to a bargain $26, I am getting deluged with emails from readers asking if it is time to start hedging portfolios one more time and buying the iPath S&P 500 VIX Short Term Futures ETN (VXX). The answer is not yet, but soon, possible very soon. They are inquiring at absolutely the wrong time. And here is the problem. When the (VIX) rises, it usually spikes straight up, and then right back down again. This time, it spiked but has since hung around the $23 level rather than collapse back down. That suggests that there is another leg up to go in volatility until it hits $50 or more before it takes a much-deserved break. That means the stock market has one more sharp selloff left before we hit bottom and bounce. Markets can ignore trade wars, rising interest rates, zero interest rates, and international political instability (Britain and Hing Kong) for a while, but not forever. When the time DOES come to pay the piper, prices will volatility will rocket. So I am more than usually interested in hedging the downside risk for my trading book. A good rule of thumb is to let the (VIX) sit at a bottom for a week, and then go buy the (VXX). Two weeks is even better. That way you can ignore expensive and unnecessary time decay. Which all brings me to the subject at hand. If you are new to the service and have no longs, you probably should skip this trade and just watch it as a learning experience. This can also be a great hedge for any long positions we may want to add in the coming weeks, such as in “trade peace,” or technology plays. As I never tire of telling people, no one ever complains when they buy fire insurance and their house doesn’t burn down. If you are new to this service, don’t freak out. My daily research newsletters are not always about exploring the esoterica of options, or volatility trading. I’ll let you know when I’m ready to pull the trigger with a Trade Alert. I am always trying to get better prices. If you are new to the (VIX) game, please read the educational piece below ​ ​ ​ ​

​ The ABCs of the VIXI am one of those cheapskates who buy Christmas ornaments by the bucket load from Costco in January for ten cents on the dollar because my 11-month theoretical return on capital comes close to 1,000%. I also like buying flood insurance in the middle of the summer draught, when the forecast in California is for endless days of sunshine. That is what we had at the end of July when the (VIX) was plumbing the depths of $12. Get this one right, and the profits you can realize are spectacular. It gets better. If the bottom in volatility exactly coincides with the peak in the stock market that it measures, volatility could be headed back up to the 30% handle, and maybe more. I double dare you to look at the charts below and tell me this isn’t happening. Watch carefully for other confirming trends to affirm this trade is unfolding. Those would include a strong dollar, and a weak Japanese yen, Euro, and rising fixed income instruments of any kind. Notice that every one of these is happening this week! Reversion to the mean, anyone? You may know of this from the many clueless talking heads, beginners, and newbies who call (VIX) the “Fear Index”. For those of you who have a PhD in higher mathematics from MIT, the (VIX) is simply a weighted blend of prices for a range of options contracts on the S&P 500 index (SPX). The formula uses a kernel-smoothed estimator that takes as inputs the current market prices for all out-of-the-money calls and puts for the front month and second month expirations. The (VIX) is the square root of the par variance swap rate for a 30-day term initiated today. To get into the pricing of the individual options, please go look up your handy dandy and ever-useful Black-Scholes equation. You will recall that this is the equation that derives from the Brownian motion of heat transference in metals. Got all that? For the rest of you who do not possess a PhD in higher mathematics from MIT, and maybe scored a 450 on your math SAT test, or who don’t know what an SAT test is, this is what you need to know. When the market goes up, the (VIX) goes down. When the market goes down, the (VIX) goes up. Period. End of story. Class dismissed. The (VIX) is expressed in terms of the annualized monthly movement in the S&P 500 (SPX), which with the (VIX) today at $10 is at $72.54. ​ ​

Quote of the Day“You always sound smarter when you’re a bear than when you’re a bull,” said Adam Parker formerly of Morgan Stanley.

​

 

[Bozzie]

	Read in Browser
LISTEN TO TODAY'S PODCAST AVAILABLE AT 8AM ON:
Top News The Final Frontier Shutterstock​ Just 11 days after Richard Branson flew to space on Virgin Galactic's (NYSE:SPCE)spaceplane, Jeff Bezos will make his own attempt aboard Blue Origin's (BORGN) New Shepard rocket. He'll fly with a crew of three, including his older brother Mark, female aviation pioneer Wally Funk and 18-year-old Oliver Daemen, a fill-in for the winner of a $28M charity auction. The passengers will experience a few minutes of weightlessness, before their capsule parachutes onto the desert just 10 minutes after liftoff, which is scheduled for 9:00 a.m. ET. Quote: “To see the Earth from space, it changes you. It changes your relationship with this planet, with humanity,” Bezos said before the flight. “It's a thing I've wanted to do all my life.” Backdrop: Bezos founded Blue Origin in 2000 and has been funding the company by selling $1B in Amazon (NASDAQ:AMZN) stock a year. His high school girlfriend even once remarked, “Jeff started Amazon just to get enough money to do Blue Origin,” to which Bezos exclaimed, “I can't prove her wrong.” Since 2015, Blue Origin has completed 15 test flights, carrying up experiments and the company's test dummy named Mannequin Skywalker. Besides a booster crash landing on the maiden flight, all the trips were successful. Differences: As mentioned earlier, Bezos' capsule sits atop a rocket (compared to Galactic's VSS Unity which takes off on a jet plane and is released at 50,000 feet). Test pilots and flight engineers will also not be aboard the Blue Origin journey from West Texas, as the capsule is entirely automated (Galactic requires two pilots to get to space and back). Meanwhile, Bezos' flight will shoot above the Kármán line, a boundary commonly referred to as the beginning of space, with an altitude of about 66 miles vs. Branson's 53.5 miles. Outlook: Congress has restricted the FAA from regulating the safety of commercial space flights since 2004 to help the sector develop without heavy compliance costs. The policy has been extended several times over the years and now runs until 2023. Crews today fly under a regime known as “informed consent,” meaning potential astronauts take on similar risks to skydivers and bungee jumpers. Bezos is fighting for a share in the space market that will triple in size to more than $1T in annual sales by 2040, according to Morgan Stanley, whose forecast assumes rapid developments in space tourism, moon landings and satellite broadband Internet. (25 comments) Bonds Banking on higher yields Treasury yields tumbled yesterday, pushing the benchmark 10-year below 1.2% for the first time since February. That had a knock-on effect on reflation plays, with the Dow (DJI)(NYSEARCA:DIA) seeing its biggest down day since October. This morning, yields are ticking up a little, with the 10-year Treasury (NYSEARCA:TBT) (NASDAQ:TLT) up 3 basis points to 1.21%. A sharp decline in yields coincidental to a rise in COVID Delta variant cases indicates economic growth concerns. But technical factors are also at play. “It's a battle between the fundamentals and the technicals,” says Myles Bradshaw, J.P. Morgan Asset Management head of global aggregate fixed income strategies. “The fundamentals, we all know. The economy is strong, the economy is recovering, inflation is rising, so why are bond yields falling? It seems bizarre, doesn't it?” "Bond yields are falling, I think, critically because of a lot of positions issues,” he says. Bradshaw said on Bloomberg that prior to the most recent Fed meeting “there was a lot of positions, short position in the long bond sector, and therefore you had short covering. You've also had increased buying from liability-driven investors that has meant there has been no marginal sellout on the long end.” “I think the technicals are extremely positive, there's a demand for a safe asset as equities move higher and that's been beating fundamentals of late.” Another transitory phenomenon?: Just as the Fed has been banging the drum on inflation being transitory, Wall Street strategists still look convinced that the path for rates is higher this year. Halfway into 2021, the median 10-year yield forecast among 30 analysts was 1.75%. The predictions ranged between 1.5% and 2%. The probability of a recession next year is just 7%, “far below the 20% that has forecast nearly every recession back 60 years,” BTIG's Julian Emanuel writes. “What has the bond market bid in our view is the Wall of Money,” he says. “Monetary and fiscal policy enacted and proposed equal to 55% of GDP; the Fed’s balance sheet, government debt, money supply, and money market balances all moving skyward. This same Wall has bid up stocks, commodities, crypto, houses and goods of all kinds - inflation.” “We think the market’s focus on rate hikes and the flattening of the yield curve is a bit premature,” Subadra Rajappa, fixed income strategist at Société Générale, writes. “We believe risks are skewed towards higher yields and recommend positioning for it by way of positive carry steepeners in cash and conditionally via swaptions.” “We think the fall in yields partly indicates confidence that - inflation will prove fleeting,” UBS says. “But it also reflects technical factors in the Treasury market that we expect to fade and worries over growth that we think are overdone. As a result, we see 10-year yields rising back to 2% over the coming year.” (4 comments) Healthcare Statin study Statins, a popular class of cholesterol-lowering drugs, may also lower the risk of death from COVID-19, according to new findings. Examining data from the American Heart Association’s COVID-19 Cardiovascular Disease Registry, researchers at the University of California San Diego School of Medicine found that patients taking statin medications had a 41% lower risk of in-hospital death from COVID-19. Statins' anti-inflammatory effects and binding capabilities may potentially hinder progression of COVID-19. (34 comments) Sponsored By Global X ETFs Companies at the Leading Edge of Blockchain Technology – In a Single Trade Applications for blockchain technology have evolved beyond well-known cryptocurrencies and digital assets. Its reach now extends to re-imagining legal contracts, health care records and supply chain management, among a growing number of uses. We recently introduced the Global X Blockchain ETF (BKCH), designed to provide investors access to companies at the leading edge of this technology – including digital asset mining, blockchain applications, and more. Unlock a New Investment Opportunity: Explore BKCH Tech No deal for Intel? Thomas Caulfield, CEO of semiconductor manufacturer GlobalFoundries, shot down reports that Intel (NASDAQ:INTC) was in talks to buy the company in a $30B deal. "There's nothing to that story," he bluntly told CNBC in an interview Monday. Caulfield also gave an upbeat forecast for the chip-making industry, saying that an increase in capacity won't create a boom-and-bust cycle for the sector because current demand can support a massive expansion in output. (37 comments) IBM tops forecasts Led by gains in its hybrid cloud business, IBM (NYSE:IBM) reported second-quarter earnings results that topped Wall Street analysts' forecasts, and revenue that edged upward from the same period a year ago. IBM reported a second-quarter profit of $2.33 a share, on revenue of $18.7 billion, excluding one-time items. Analysts that cover IBM had forecast Big Blue to earn $2.29 a share, on $18.3 billion in revenue. (22 comments) Today's Markets In Asia, Japan -0.96%. Hong Kong -0.5%. China -0.1%. India -0.5%. In Europe, at midday, London +0.7%. Paris +0.9%. Frankfurt +0.6%. Futures at 6:20, Dow +0.5%. S&P +0.4%. Nasdaq +0.4%. Crude +0.4% at $66.62. Gold +0.4% at $1816.15. Bitcoin -5.4% at $29715. Ten-year Treasury Yield +1.9 bps to 1.20% Today's Economic Calendar 8:30 Housing Starts and Permits 8:55 Redbook Chain Store Sales Monday's Key Earnings IBM (NYSE:IBM) tops Wall Street forecasts +3.8% PM on strong cloud business revenue. PPG (NYSE:PPG) Industries plunges -5.7% AH as supply disruptions, cost inflation drive Q2 miss. Steel Dynamics (NASDAQ:STLD) slips -1.2% AH despite record Q2 results, continued strength seen in Q3. Companies reporting earnings today » ​ What else is happening... Apple (NASDAQ:AAPL) delays return to the office as COVID cases climb. Snap (NYSE:SNAP) buys 3D AR solutions provider Vertebrae; terms not disclosed. Bitcoin (BTC-USD) continues to test $30K level after Grayscale Bitcoin Trust (OTC:GBTC) unlocking. Duolingo (DUOL) sets $85-$95/share IPO terms, valuing language-app firm at up to $3.5B. U.S. is said to near $26B opioid settlement with drug distributors, J&J (NYSE:JNJ). U.S., Germany to announce deal on Nord Stream 2 in coming days - Reuters. Comcast (NASDAQ:CMCSA), ViacomCBS (VIAC, VIACA) heads reportedly met last month to discuss international streaming partnership.

​

 

[Bozzie]

July 21, 2021

Good morning. (Was this newsletter forwarded to you? Sign up here.)

A tough critic of tech will lead the Justice Department’s antitrust team.Stefani Reynolds for The New York Times

[h=2]‘Wu & Khan & Kanter’[/h]

After six months and much speculation, the White House has finally nominated someone to lead the antitrust division at the Justice Department: Jonathan Kanter, the former Paul Weiss lawyer and longtime critic of Big Tech.

If confirmed by the Senate, which could take awhile, Kanter will lead the division that filed a lawsuit last year against Google, accusing it of illegally protecting its monopoly over search advertising. The division has also been asking questions about Apple’s business practices.

Kanter built an unusual practice out of criticizing tech giants from inside corporate law firms. He worked for Microsoft as a lawyer at Fried Frank and Cadwalader, helping the tech giant build its case against Google more than a decade ago. Kanter later worked for Yelp doing the same. His other clients in cases challenging Big Tech have included the likes of News Corp and Spotify.

Kanter’s nomination will please progressives who want to rein in corporate power. A slogan some adopted after President Biden took office was “Wu & Khan & Kanter.” (Here it is on a mug.) This refers to a trio of Big Tech critics that includes Tim Wu, now part of Biden’s National Economic Council, and Lina Khan, who now heads the F.T.C. Kanter’s nomination also comes shortly after House lawmakers advanced a suite of antitrust bills taking aim at Big Tech and Biden issued an executive order charging federal agencies with more closely scrutinizing corporate consolidation and monopoly practices.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

Kanter’s past work could raise ethical questions. Both Facebook and Amazon have asked Khan to recuse herself from matters involving the companies at the F.T.C., even though her background is as a legal scholar and not a paid representative for their rivals. (Disqualifying a commissioner isn’t easy.) Asked whether Kanter would recuse himself from cases involving Google and Apple, a White House official simply said the administration was confident that it could move forward with his nomination given his expertise and record. Google did not respond to a request for comment.

He has support on both sides of the aisle, reflecting bipartisan opposition to Big Tech these days. Amy Klobuchar, a Minnesota Democrat who leads the Senate’s antitrust subcommittee, called Kanter “an excellent choice.” Senator Mike Lee, a conservative Republican from Utah, said he was “encouraged” by Kanter’s track record.

But Wall Street may not be as happy with the pick, given a rumored name for the Justice Department post, Sullivan & Cromwell’s Renata Hesse, was seen as friendlier to big companies. M.&.A is at record levels, but scrutiny in Washington on acquisitions has expanded beyond tech to other industries like agriculture, health care and insurance. If Kanter is confirmed as the Justice Department’s top trustbuster, will dealmakers curb their enthusiasm?

[h=3]HERE’S WHAT’S HAPPENING[/h]

Markets are set to maintain their recovery. Stock futures are up strongly this morning after yesterday’s big jump. That suggests investors are taking solace in vaccinations keeping the economic recovery going, treating Monday’s rout as a buying opportunity.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

Tom Barrack, the financier and Trump ally, is arrested. Prosecutors chargedthe founder of Colony Capital, who led Donald Trump’s inaugural committee, with publicly promoting the United Arab Emirates’ agenda without registering as a lobbyist. Over three years, Barrack raised $1.5 billion in funds from the U.A.E. and Saudi Arabia for Colony.

Netflix’s hold on the streaming crown is slipping. The company lost nearly a half-million subscribers in the U.S. and Canada in the second quarter, though it added 1.5 million customers overall. Data shows that customers are steadily shifting their attention to rivals like Disney+.

Apple and Morgan Stanley diverge on return-to-office plans. The iPhone maker delayed its official return by at least a month, to October, citing a surge in coronavirus infections. But Morgan Stanley’s chief legal officer urged the firm’s outside law firms to bring their workers back to the office. Meanwhile, Hollywood studios can require mandatory vaccinations on set through September, following a deal with unions.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

Wall Street wins an N.B.A. championship. The Milwaukee Bucks defeated the Phoenix Suns in Game 6 of the league’s finals, earning their first championship in 50 years. It’s a major victory for the finals M.V.P. Giannis Antetokounmpo — and for the financiers who own the Bucks, including Jamie Dinan of York Capital, Wes Edens of Fortress and Marc Lasry of Avenue Capital.

[h=2]Exclusive: Ken Frazier’s next act[/h]

Ken Frazier stepped down as Merck’s C.E.O. last month, but he has kept busy since. He remains executive chairman of the pharmaceutical giant and is co-leading OneTen, a start-up that aims to create one million jobs for Black Americans. Now, DealBook is first to report, he’s adding another role: venture capitalist.

Frazier will join General Catalyst as chairman of health assurance initiatives, a new position in which he will focus on health care start-ups. It’s an area of focus for General Catalyst’s managing partner, Hemant Taneja, who recently spearheaded a $600 million fund.

“I’ve encountered a lot of people who are working at what I would call an intersection between tech and life sciences. These people are, in my experience, very fluent in digital technology and data science, analytics, machine learning,” Frazier told DealBook. But what is needed is “people who understand empathy,” he said. “We need people who have both data-led approaches as well as more human-centric approaches.”

He was brought onboard by his friend Ken Chenault, who joined General Catalyst in 2018 as chairman after retiring as American Express’s C.E.O. The two first met at Harvard Law School and became among the few Black chief executives of Fortune 500 companies. The two Kens most recently pushed hundreds of corporate leaders to publicly oppose states’ efforts to limit voting rights.

“As you can imagine, he had myriad choices about what he would do,” Chenault said of the other Ken. “Clearly our personal relationship was important, but that wouldn’t have been enough if Ken didn’t believe in the vision and what we’re trying to do in health care.”

Jeff Bezos, third from left, with fellow astronauts Oliver Daemen, Mark Bezos and Wally Funk during a news conference after the flight.Joe Raedle/Getty Images​

[h=2]“I also want to thank every Amazon employee and every Amazon customer because you guys paid for all of this.”[/h]

— Jeff Bezos, at a news conference upon his return to Earth. (More on that below.) Also after his spaceflight, Bezos announced he was giving $100 million each to the CNN contributor Van Jones and the chef José Andrés to direct toward charity as part of a “surprise” philanthropic initiative.

[h=2]Is space tourism good for the environment?[/h]

Jeff Bezos, upon descending from his trip to the edge of space yesterday, reconfirmed his commitment to fighting climate change. “We have to build a road to space so that our kids and their kids can build a future,” he told MSNBC.

Bezos says space tourism is a first step toward moving people (and polluting industry) into space to avert an energy crisis. His fellow billionaire space entrepreneurs, like Richard Branson and Elon Musk, have also said their companies are an answer to climate change: Musk wants to colonize Mars in case we ruin Earth.

Critics argue that space tourism will add to emissions rather than save the planet. But the industry is still low on the list of polluters.

The global space industry uses less than a tenth of a percent of propellant as the aviation industry uses fuel. What’s more, the amount used for rockets like those that carried Branson and Bezos to space is a tiny portion of that, said Martin Ross, a scientist at the Aerospace Corporation, a federally funded research and development center. In a recent study, Ross found that space tourism companies could launch as many as 10,000 suborbital flights per year before the effect of their emissions on the atmosphere would begin to approach that of orbital rockets.

It is not yet understood exactly how rocket launches affect the planet. The space industry is the only direct source of emissions into the stratosphere above 20 kilometers. Particles that rockets leave behind can absorb sunlight or reflect sunlight, potentially changing the climate of the stratosphere or affecting the ozone layer.

“We know it’s not a problem now,” Ross said, “but we can’t predict how much of that up and down you can do before it does become a problem.”

Aside from whether space tourism will contribute to climate change, there’s skepticism over space companies’ claims that they can help answer climate change. Some say Bezos’s vision for colonizing space isn’t feasible, and Bezos himself calls it a “long-range problem.” Billionaires going to space should first consider climate disasters on Earth, critics argue.

It’s not quite fair to say that Bezos has ignored these problems. Although Amazon is a major polluter, it says it aims to go carbon neutral by 2040 and Bezos has pledged $10 billion of his personal wealth to address climate change. But it’s possible to spot a difference in methods: Are moonshots only for space?

What do you think? What role can space tourism play in climate change? Let us know: dealbook@nytimes.com. Include your name and location and we may feature your response in a future newsletter.

Want to share The New York Times with your friends and family? Invite them to enjoy unlimited digital access to our journalism with this special offer.

[h=3]THE SPEED READ[/h]

Deals

The cryptocurrency exchange FTX raised $900 million from investors like SoftBank and Sequoia Capital at an $18 billion valuation. (WSJ) The mining giant BHP is reportedly weighing the sale of its oil and gas businesses at a valuation of at least $15 billion. (Bloomberg) Nasdaq plans to spin out its platform for trading in shares of privately held start-ups, in a partnership with Citigroup, Goldman Sachs and Morgan Stanley. (FT) The Indian food delivery company Swiggy raised $1.25 billion from investors led by SoftBank’s Vision Fund 2 and Prosus. (TechCrunch)

Policy

Fox News hosts are increasingly urging Americans to get vaccinated, but many Republican lawmakers aren’t following suit. (NYT) Chinese suppliers to Apple and Nike are shunning workers from the Xinjiang region to avoid U.S. bans on products made with forced labor. (WSJ) Americans own nearly twice as much medical debt as previously thought, and the liabilities are largest where Medicaid wasn’t expanded. (NYT)

Washington has dropped its opposition to a natural-gas pipeline that runs from Russia to Germany. (WSJ) Dr. Anthony Fauci clashed with Senator Rand Paul over American funding of Wuhan’s virus research facility: “Senator Paul, you do not know what you’re talking about, quite frankly, and I want to say that officially.” (WaPo)

Best of the rest

JPMorgan Chase gave Jamie Dimon 1.5 million reasons to stick around for several more years. (Bloomberg) Carnival expects its cruises to reach 65 percent capacity by year’s end. (Reuters) “An ‘Airbnb for Pools’ Is Making a Splash This Summer” (WSJ) It isn’t just deals that are flourishing: The business of making “deal toys” that commemorate transactions is, too. (Insider)

Thanks for reading! We’ll see you tomorrow.

 

[Bozzie]

Global Market Comments July 21, 2021 Fiat Lux Featured Trade: (AN INSIDER’S GUIDE TO THE NEXT DECADE OF TECH INVESTMENT), (AMZN), (AAPL), (NFLX), (AMD), (INTC), (TSLA), (GOOG), (FB)

​ An Insider’s Guide to the Next Decade of Tech InvestmentLast weekend, I had dinner with one of the oldest and best-performing technology managers in Silicon Valley. We met at a small out-of-the-way restaurant in Oakland near Jack London Square so no one would recognize us. It was blessed with a very wide sidewalk out front and plenty of patio tables to meet current Covid-19 requirements. The service was poor and the food indifferent, as are most dining experiences these days. I ordered via a QR code menu and paid with a touchless Square swipe. I wanted to glean from my friend the names of the best tech stocks to own for the long term right now, the kind you can pick up and forget about for a decade or more, a “lose behind the radiator” portfolio. To get this information, I had to promise the utmost confidentiality. If I mentioned his name you would say “oh my gosh!” Amazon (AMZN) is now his largest holding, the current leader in cloud computing. Only 5% of the world’s workload is on the cloud presently so we are still in the early innings of a hyper-growth phase there. By the time you price in all the transportation, labor, and warehousing costs, Amazon breaks even with its online retail business at best. The mistake people make is only focusing on these lowest of margin businesses. It’s everything else that’s so interesting. While its profitability is quite low compared to the other FANG stocks, Amazon has the best growth outlook. For a start, third-party products hosted on the Amazon site, most of what Amazon sells, offer hefty 30% margins. Amazon Web Services (AWS) has grown from a money loser to a huge earner in just four years. It’s a productivity improvement machine for the world’s cloud infrastructure where they pass all cost increases on to the customer, who once in, they buy more services. Apple (AAPL) is his second holding. The company is in transition now justifying a massive increase in earnings multiples, from 9X to 40X. It now trades at 30X. The iPhone has become an indispensable device for people around the world, and it is the services sold through the phone that are key. The iPhone is really not a communications device but a selling device, be it for apps, storage, music, or third-party services. The cream on top is that Apple is at the very beginning of an enormous replacement cycle for its installed base of over one billion phones. Moving from up-front sales to a lifetime subscription model will also give it a boost. Half of these are more than four years old, positively geriatric in the tech world. More than half of these are outside the US. 5G will add a turbocharger. Netflix (NFLX) is another favorite. The world is moving to “over the top” content delivery and Netflix is already spending twice as much on content as any other company in this area. This is why the company won an amazing 21 Emmys this year. This will become a much more profitable company as it grows its subscriber base and amortizes its content costs. Their cash flow is growing by leaps and bounds, which they can use to buy back stock or pay a dividend. Generally speaking, there is no doubt that the pandemic has pulled forward some future technology demand with the stay-at-home trend. But these companies have delivered normal growth in a hard world. Tech growth will accelerate in 2021 and 2022. 5G will enable better Internet coverage for everyone and will increase the competitiveness of the telecom companies. Factory automation will be another big area for 5G, as it is reliable and secure, and can be integrated with artificial intelligence. Transportation will benefit greatly. Connected self-driving cars will be a big deal, improving safety and the quality of life. My friend is not as worried about government threatened break-ups as regulation. There will be more restraints on what these companies can do going forward. Europe, which has no big tech companies of its own, views big American tech companies simply as a source of revenues through fines. Driving companies out of business through cutthroat competition is simply not something Europeans believe in. Google (GOOG) is probably more subject to antitrust proceedings both in Europe and the US. The founders have both retired to pursue philanthropic activities, so you no longer have the old passion (“don’t be evil”). Both Google and Facebook (FB) control 70% of the advertising market between them, which is inherently a slow-growing market, expanding at 5% a year at best. (FB)’s growth has slowed dramatically, while it has reversed at (GOOG). He is a big fan of (AMD), one of his biggest positions, which is undervalued relative to the other chip companies. They out-executed Intel (INTC) over the last five years and should pass it over the next five years. He has raised value tech stocks from 15% to 30% of his portfolio. Apple used to be one of these. Semiconductor companies today also fall into this category. Samsung with 40% margins in its memory business is a good example. Selling for 10X earnings is ridiculously cheap. It is just a matter of time before semiconductors get rerated too. He was an early owner of Tesla (TSLA) back in the nail-biting days when it was constantly running out of cash. Now they have the opposite problem, using their easy access to cash through new share issues as a weapon to fight off the other EV startups. Tesla is doing to Detroit what Apple did to the cell phone companies, redefining the car. Its stock is overvalued now but will become much more profitable than people realize. They also are starting to extract services revenues from their cars, like Apple has. Tesla will grow revenues 30%-50% a year for the next two or three years. They should sell several million of the new small SUV Model Y. Most other companies bringing EVs will fall on their faces. EVs are a big factor in climate change, even in China, the world’s biggest polluter. In Europe, they are legislating gasoline cars out of existence. If you can make money building cars in Fremont, CA, you can make a fortune building them in China. Tech valuations are high, there is no doubt about it. But interest rates are much lower by comparison. The Fed is forcing people to buy stocks, enabling these companies to evolve even faster. When rates rise in a year or so, tech stocks may have to come down. They have a lot more things going for them than against them. The customers keep coming back for more. Needless to say, the above stocks should make up your short list for LEAPS to buy at the coming market bottom. ​ ​ ​ ​ ​ ​ ​

Quote of the Day“The French have more fun in one year than the English do in ten,” said John Adams, America’s second president, and one-time ambassador to Paris and London.

​

 

[Bozzie]

July 22, 2021

Good morning. (Was this newsletter forwarded to you? Sign up here.)

Democracy in action.Amy Lombard for The New York Times

[h=2]Big risks, big rewards?[/h]

Robinhood, which touts its mission as “democratizing finance,” is trying out a new kind of I.P.O.: The online brokerage plans to sell as much as a third of its offering to customers through its app. What could go wrong?

It’s the most a major company has offered to ordinary investors in an I.P.O. Most businesses — including the hospital-scrubs maker Figs, which used a Robinhood program to sell stock to retail investors as part of its offering — have set aside roughly 1 percent of shares for retail investors.

The big risk is volatility. Underwriters traditionally worry about letting retail investors have an outsize allocation in I.P.O.s because they are considered more likely to immediately dump their shares. And many of Robinhood’s customers are active traders, as shown when it became the brokerage of choice during the meme-stock frenzy. Robinhood is also letting its employees sell up to 15 percent of their shares immediately upon its listing.

Robinhood’s bankers expect early trading to be choppier than other offerings, people involved in the process said. That could anger customers, prompting lawsuits and regulatory scrutiny. And if the stock falls after its debut, its investors will also have less money to trade on the platform.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

“If it works, it’s going to be a fantastic win,” said R.A. Farrokhnia of Columbia Business School. “If it goes badly, it will be a black mark.” A smooth offering could help burnish the company’s reputation, which has been marred by regulatory fines, technical outages and complaints about customer service. We’ll see what happens next Wednesday, when Robinhood is set to price its shares, and on Thursday, when it is expected to start trading. At the high end of its expected price range, the company would be valued at $35 billion.

There are plenty of cautionary tales in I.P.O. history. Here are a few of the big ones:

Google in 2004 tried using a Dutch auction, in which investors submit individual bids for shares and the I.P.O. price is set at a level that would sell the most stock. The tech giant was forced to cut the size and price of its offering. (Dutch auctions never really took off after that.) Vonage, a phone service provider, tried to sell shares to its customers as part of its 2006 I.P.O., but a technical glitch left buyers unclear over whether their trades had gone through until days later, by which point its stock price had plummeted. Customers sued Vonage, and regulators fined the banks that ran the offering. BATS Global Markets sought to go public on its own exchange in 2012, but a series of “technical issues” forced it to halt trading in several stocks, including its own, and eventually pulled its offering. (It later went public in 2016.)

[h=3]HERE’S WHAT’S HAPPENING[/h]

A debt ceiling showdown looms. Senator Mitch McConnell said it’s unlikely that Republican lawmakers would vote to increase the U.S. debt limit, citing Democrats’ spending plans. Democrats criticized his threat as endangering America’s fiscal health, with the government expected to run out of cash by November.

Johnson & Johnson joins a $26 billion opioid settlement. The deal, which also includes three major distributors, will give billions to ravaged states and cities and end years of litigation against the companies. Thousands of lawsuits against others — including manufacturers and drugstore chains — remain unresolved.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

President Biden predicts vaccines will get final approval this fall. At a town hall in Ohio, Biden said the F.D.A. would probably provide official signoff on Covid inoculations — all are currently authorized on an emergency basis — and ease the concerns of some vaccination holdouts.

Banks urge Chinese businesses to move their I.P.O.s to Hong Kong. Wall Street underwriters are telling clients to pivot to the territory, after Beijing’s crackdown on domestic tech companies listing abroad, The Financial Times reports. But many won’t be able to, given Hong Kong’s strict eligibility requirements.

PG&E will spend tens of billions to bury power lines. The California utility said it would put 1,000 miles a year underground — up from 70 miles planned this year — to help prevent wildfires. The move came after a report that found PG&E equipment was most likely responsible for the 30,000-acre Dixie Fire. Culpability for wildfires pushed the company to file for bankruptcy in 2019.

[h=2]Exclusive: KKR’s big solar bet[/h]

KKR will announce today that it’s making a “significant” minority investment in Sol Systems, a U.S. renewable energy company that helps finance solar projects. The buyout giant, which has $367 billion in assets under management, is also committing to spending up to $1 billion in projects with Sol.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

“Almost all large corporate customers, including many of the traditional oil and gas companies, have goals to go 100 percent renewable by 2030 or 2040,” said Yuri Horwitz, Sol’s C.E.O. Those commitments come amid regulatory and investor scrutiny that is expected to intensify in the coming years.

Private equity is racing to invest in renewable energy during the Biden administration, driven in part by expectations of increased public investment as the White House aims to cut the country’s fossil-fuel emissions by 80 percent by 2030. Yesterday, Carlyle announced it was forming a renewable energy infrastructure unit. KKR, for its part, brought on Tim Short and Benoit Allehautthis spring to help steer renewable investments in its $18 billion infrastructure division. Among its recent deals was a $1.4 billion investment last year in the wind and solar company NextEra.

But KKR is still betting on fossil fuels. “Natural gas is still a very important aspect of the energy transition until we have technology solutions that allow otherwise,” Short said. And last month, the firm announced a $5.7 billion deal to create a vehicle that consolidates shale oil companies.

[h=2]“I might pump, but I don’t dump.”[/h]

— Elon Musk, speaking on a panel about his habit of talking up Bitcoin but denying that he does so to earn a quick profit. He also revealed that he personally owns Ethereum, in addition to Bitcoin and Dogecoin, and that his rocket company, SpaceX, owns Bitcoin. (Tesla bought $1.5 billion worth of Bitcoin this year.)

[h=2]Exclusive: Fanatics plays offense on online sports[/h]

Fanatics, the sports apparel retailer, is going beyond hats and hoodies. The company, which was last valued at $12.8 billion, has tapped IAC’s former C.F.O., Glenn Schiffman, to help oversee its efforts to break into new industries as it eyes an I.P.O., DealBook hears. (Mich Chandlee, the company’s current C.F.O., will continue to oversee its merchandise unit.)

Fanatics sees itself as more than a retailer. In June, it started a digital collectibles firm called Candy Digital, which has partnered with Major League Baseball to introduce a series of NFTs. Fanatics is also considering forays into ticketing, betting and gaming, drawing on its ties with major sports leagues through its licensing deals.

It is branching out after the pandemic disrupted the sports industry, forcing leagues to look for new sources of revenue. That has upped the value of analytics about fan behavior, an industry expected to be worth nearly $4 billion by 2023, according to Deloitte. Fanatics made its name by taking a fast-fashion approach to sports merchandise, setting itself up to sense shifts in fan demand and quickly produce the hottest items.

A new C.F.O. isn’t the only big new hire. Fanatics has also tapped Tucker Kain, the former president of the Los Angeles Dodgers, to be its chief strategy and growth officer, and Matt King, FanDuel’s former C.E.O., to lead its gambling and gaming division.

[h=2]Olympics win ad gold despite setbacks[/h]

It’s hard to imagine how things could be going worse for the organizers of the Tokyo Olympics. But despite a spike in coronavirus cases, a lack of spectators and a year’s delay, skipping the Games is not an option for advertisers in the U.S., The Times’s Tiffany Hsu reports.

The situation is “not ideal,” said the marketing chief of Chipotle. But the company, like many others, is buying ad time anyway. (The story is different in Japan, with large sponsors like Toyota pulling local TV ads because of the public backlash surrounding the Games.) NBCUniversal, which is airing the Olympics in the U.S., expects to make $2.25 billion in ad revenue from its broadcast. That’s up 20 percent from the Games in Rio five years ago.

Large companies have adjusted their campaigns to fit the mood, but they are still going forward with them.

United Airlines scrapped “Visit Japan”-themed ads for ones that promote travel in general. Visa canceled its on-site events, but is still running an ad during the opening ceremony as part of its effort to reposition itself as more than just a credit card company. Microsoft is leaning into the fact that few will be able to watch the Games in person with an ad that features people who had to cancel their plans to attend the Games connecting with Tokyo residents via its videoconferencing software.

NBCUniversal is charging an average of $1.25 million for a 30-second prime-time TV ad, up 15 percent from the Rio games. For such a large audience at a time with few competing events on the schedule, that is seen as worth it for many advertisers. (NBC is reportedly seeking $6 million for a 30-second ad during the next Super Bowl.) And with the Winter Olympics set to take place in Beijing, where human-rights issues could make brand associations fraught, the Covid-interrupted Games this year may still end up being an easier sell than the next time around.

Want to share The New York Times with your friends and family? Invite them to enjoy unlimited digital access to our journalism with this special offer.

[h=3]THE SPEED READ[/h]

Deals

*********, the money-transfer service, has reportedly received takeover interest from Stellar Development Foundation and Advent International. (Bloomberg) Shares in the private equity firm Bridgepoint jumped over 20 percent in their London debut. (Reuters) Clearview AI, the face-recognition start-up that is the subject of lawsuits, has raised $30 million from undisclosed investors. (NYT)

Policy

Jay Powell is likely to be renominated for another term as Fed chair in February — but insiders say that’s not guaranteed. (WSJ) A bill to force companies to report cyberattacks is gaining steam in Washington. (MarketWatch) The Biden administration picked David Cohen, a senior executive at Comcast and longtime Democratic donor, as the U.S. ambassador to Canada. (WSJ) The outing of a Catholic priest using information from his cellphone raises big questions about U.S. data privacy laws. (NYT)

Best of the rest

Richard Branson beat Jeff Bezos to space, but the buzz around Bezos’s rocket trip beat Branson’s on social media. (Pulsar)

“The Amazonification of Space Begins in Earnest” (NYT) How TikTok’s algorithms figure out what you like to watch. (WSJ) Content creators are turning to A.I. to compose music on the fly that matches the mood of their videos. (Wired) The National Labor Relations Board ruled that unions’ giant inflatable rodents are protected by free speech. (NYT)

Thanks for reading! We’ll see you tomorrow.

We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.

 

[Bozzie]

Global Market Comments
July 22, 2021
Fiat LuxFeatured Trade:(HOW DID THOSE TECH LEAPS WORK OUT?)
(AAPL), (AMZN), (MSFT)

​

​

How Did Those Tech LEAPS Work Out?A month ago, I sent you a research piece about the merits of long-term LEAPS in the major technology stocks (click here for the link).

They included:
Amazon (AMZN) January 2022 $3,200-$3,400 vertical bull call spread

Microsoft (MSFT) January 2022 $240-$270 vertical bull call spread

Apple (AAPL) January 2022 $120-$130 vertical bull call spread

So, how did those work out? Here is the stock performance and the LEAPS performance for each position:

Amazon (AMZN) stock +11.40% LEAPS +26.79%

Microsoft (MSFT) stock +7.69% LEAPS +35.38%

Apple (AAPL) stock +13.38% LEAPS +30.92%

In other words, the LEAPS outperformed the stock to the upside by anywhere from 2.5X to 5X. All three positions are now deep-in-the-money. As long as the stocks close at or above the upper strike prices by the January 16, 20222 option expiration day, they will all produce profits of 100% or more in only seven months!

It goes to confirm the strategy that I have been vociferously arguing in recent months, that LEAPS offer far and away the best risk/reward of any investment in current market conditions. Whenever I have a payday, I pour the money straight into my retirement funds and into the most attractive LEAPS.

The liquidity for long-dated options is not that great. That is why entering limit orders in LEAPS only, as opposed to market orders, is crucial.

These are really for your buy-and-forget investment portfolio, defined benefit plan, 401k, or IRA.

Like all options contracts, LEAPS give its owner the right to exercise the option to buy or sell 100 shares of stock at a set price for a given time.

LEAPS have been around since 1990, and trade on the Chicago Board Options Exchange (CBOE).

To participate, you need an options account with a brokerage house, an easy process that mainly involves acknowledging the risk disclosures that no one ever reads.

If LEAPS expire "out-of-the-money" on expiration day, you can lose all the money you spent on the premium to buy it. There's no toughing it out waiting for a recovery, as with actual shares of stock. Poof, and your money is gone.
Note that a LEAPS owner does not vote proxies or receive dividends because the underlying stock is owned by the seller, or "writer," of the LEAPS contract until the LEAPS owner exercises.
Despite the Wild West image of options, LEAPS are actually ideal for the right type of conservative investor.

They offer vastly more margin and more efficient use of capital than traditional broker margin accounts. And you don’t have to pay the usurious interest rates that margin accounts usually charge.

And for a moderate increase in risk, they present hugely outsized profit opportunities.

For the right investor, they are the ideal instrument.

So, let’s get on with my specific math for the (AMZN) LEAPS to discover its inner beauty.

By now, you should all know what vertical bull call spreads are. If you don’t, then please click this link for my quickie video tutorial (you must be logged in to your account). Warning: I have aged since I made this video.

A month ago, Amazon closed at $3,346.83.

The cautious investor should have bought the (AMZN) January 2022 $3,200-$3,400 vertical bull call debit spread for $102. One contract gets you a $10,000 exposure. This is a bet that (AMZN) shares will close at $3,400 or higher by the January 22, 2022, option expiration, some 1.6% higher.

Sounds like a total no-brainer, doesn’t it?

Here are the specific trades you needed to execute this position:

expiration date: January 21, 2022

Portfolio weighting: 10%

Number of Contracts = 1 contract

Buy 1 January 2022 (AMZN) $3,200 call at……….........….….…$374.00
Sell short 1 January 2022 (AMZN) $3,400 call at…........…….…$272.00
Net Cost:………………………….………..…………...............….....$102.00

Potential Profit: $200.00 - $102.00 = $98.00

(1 X 100 X $98.00) = $9,800 or 96.07% in six months.

In other words, your $10,200 investment turned into $19,800 with an almost sure bet giving you a profit of 96.07%.

Why do a vertical bull call debit spread instead of just buying the January 2022 (AMZN) $3,400 calls outright?

You need a much bigger upside move to make money on this trade. (AMZN) would have to rise all the way to $3,674 to break even on the calls, and all the way up to $3,772 to match the profit of the call spread.

While I think it is possible that (AMZN) could rise that much by January, it is vastly more probable that (AMZN) will be over $3,400 by then. That is what hedge funds do all day long, and that is to find the most probable trade out there and then leverage up like crazy.

Remember, one call option gives you the right to buy 100 shares. That means over $3,400 your call spread that cost $10,200 will enable you to control 100 shares of Amazon worth $340,000. The potential upside leverage over $3,400 is 33.33X!

By paying only $102 for the spread instead of $274.00 for an outright call-only position, you can increase your size by 2.68 times, from 1 to 3 contracts for the same $10,200 commitment. That triples your upside leverage on the most probable move in (AMZN), the one above $3,400. That increases the upside leverage over $3,400 to an impressive 100X compared to the outright call buy.

How could this trade go wrong?

There is only one thing. We get a new variant on Covid-19 that overcomes the existing vaccines and brings a fourth wave in the pandemic.

In this case, (AMZN) doesn’t rise above $3,400 but crashes down to the $1,700 low we saw during the 2020 pandemic. We go back into recession. Both of the above positions go to zero. But if we get a fourth wave, you are going to have much bigger problems than your options positions.

So there it is. You pay your money and take your chances. That's why the potential returns on these simple trades are so incredibly high.

If you are interested in getting a more dedicated LEAPS service from the Mad Hedge Fund Trader, you might consider our Concierge service, which costs $10,000 a year and is by application only. If interested, please email support@madhedgefundtrader.com and put Concierge candidate in the subject line.

Enjoy.

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

Tech LEAPS are the Way to Go​

​

​

​

​

​

Quote of the Day“Language does not provide the means for us to describe the destruction before us,” said Chancellor Angela Merkel about the damage from the climate change-induced flooding in Germany.

​

 

[Bozzie]

July 23, 2021

Good morning. (Was this newsletter forwarded to you? Sign up here.)

Sam Bankman-Fried, the C.E.O. and majority owner of FTX, is worth at least $8 billion, on paper.Lam Yik Fei for The New York Times

[h=2]Crypto’s big money is made offshore[/h]

Some of the world’s most important cryptocurrency exchanges — platforms like Binance and FTX — are not based in the United States. Yet their founders grew up in North America and trace their professional roots to Wall Street.

American regulations prevent these trading moguls from offering cryptocurrency investors’ favorite products, so they have gone abroad, where the rules are more permissive about the riskiest types of transactions. And they will keep moving to avoid crackdowns, Eric Lipton and DealBook’s Ephrat Livni report for The Times.

“It needed a non-U.S. base of operations,” said the FTX founder and C.E.O. Sam Bankman-Fried of his platform, which operates from Hong Kong. “The most important part for us — and I think for a lot of the industry as a whole — is derivatives,” he said. FTX specializes in this kind of transaction, which is off limits to U.S. retail traders. The exchange raised $900 million this week to fund its global expansion, at an $18 billion valuation.

Derivatives exchanges allow traders to take on a large amount of leverage, up to 101 times on FTX and up to 125 times on Binance. That transforms a small down payment into a huge bet that can pay off big or lead to forced sales that set off cascading liquidations and influence the underlying cryptocurrency’s prices. Billions of dollars’ worth of investments from customers with ties to the U.S. has reached some offshore exchanges, despite the ban, according to trading data through last year.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

Exchange executives admitted leverage amplifies volatility but say few traders actually use the extreme leverage their platforms advertise. Changpeng Zhao of Binance said the numbers were a “marketing gimmick.” Bankman-Fried conceded it might be time to tone down the leverage, calling it “a double-edged sword.”

“I am not saying this is going to cause the next financial crisis,” said Timothy Massad, a former chairman of the Commodity Futures Trading Commission, which regulates derivatives. “But could this be something like the butterfly that flaps its wings in Brazil that sets off a tornado in Texas?” Derivatives of a different kind played a crucial role in the financial meltdown of 2008, of course, when highly leveraged bets on home mortgages went bad and helped cause the collapse of major financial institutions.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

Regulators around the world are turning the screws. Since June, Binance has been targeted by financial officials with warnings or other enforcement actions in Britain, the Cayman Islands, Hong Kong, Lithuania, Italy, Poland and Thailand, many of them eying its high-leverage derivatives offerings. Meanwhile, with regulators in Hong Kong signaling potentially restrictive rules coming soon, Bankman-Fried said he was considering a move to Singapore. That is where his fellow crypto nomad Zhao, for now, resides.

Read the full story about crypto nomads and extended interviews with Bankman-Fried and Zhao.

[h=3]HERE’S WHAT’S HAPPENING[/h]

People are traveling like it’s 2019. Spending on airlines briefly exceeded 2019 levels for the first time since the pandemic began. Ticket prices are up, too, helping airlines report mostly upbeat earnings this week, with domestic leisure travel at or above prepandemic levels but business and international travel still lagging behind.

Intel says the global semiconductor shortage could stretch into 2023. “We have a long way to go yet,” Intel’s C.E.O., Pat Gelsinger, told The Wall Street Journal. General Motors said yesterday it planned to slow production of pickup trucks because of the chip shortage.

Continue reading the main story

[h=3]ADVERTISEMENT[/h]

A “pingdemic” is gripping Britain. With Covid cases surging, more than 600,000 people have been pinged by the government’s test-and-trace app asking them to isolate themselves for 10 days because they were near someone who had tested positive. That has led to staff shortages of truckers, train drivers, supermarket workers and more.

Amazon is ending its use of the arbitration process to settle customer disputes. The e-commerce giant let customers know in a five-sentence note about its updated “conditions of use.” Now, disputes will have to go to federal court, rather than the private and secret arbitration process, which critics say puts consumers at a disadvantage.

A tech firm hit by ransomware gets the key to unlock customers’ data. The breach of Kaseya this month led to extortion attempts of hundreds of the software company’s customers, prompting President Biden to call President Vladimir Putin of Russia, where the hacks originated. Kaseya said only that a “third party” had provided a key to unlock victims’ compromised systems.

[h=2]Uber bets on freight[/h]

Uber announced yesterday that it would acquire the logistics tech company Transplace from TPG Capital in a deal valued at more than $2.2 billion. It’s a bet to bulk up Uber’s freight business, an important but less high-profile unit than the ride-hailing giant’s other businesses.

Uber has reshaped its business during the pandemic, which was dealt a severe blow to its core ride-hailing service. The company sold its bike and scooter business and bolstered its food-delivery division with a $2.65 billion deal to acquire Postmates, a $1.1 billion deal to buy the alcohol delivery business Drizly and, this week, a partnership with Albertsons.

Uber launched Uber Freight in 2017, and the unit raised $500 million from Greenbriar Equity Group last year at a $3.3 billion valuation. Freight accounted for less than 10 percent of Uber’s sales in the first quarter. “We are very aggressively expanding freight,” Dara Khosrowshahi, Uber’s C.E.O., said at the company’s shareholder meeting in May. “And when autonomous technology is developed and when it is fully safe, we absolutely want autonomous trucks and autonomous drivers, so to speak, to be on the freight platform.”

Can trucking help Uber achieve profitability? That’s the key question as Uber’s main consumer-facing business struggles with a driver shortage. Uber says the deal will allow it to expand into Mexico and help the loss-making freight division break even (on an operating basis) by the end of next year.

[h=2]“What for most industries were hurricane-like headwinds was a pot of gold for tech.”[/h]

— Dan Ives of Wedbush Securities on how many technology companies have had a lucrative pandemic. “Tech is triumphant in a way that even its most evangelical leaders couldn’t have predicted,” The Times’s David Streitfeld writes, surveying the scene in Silicon Valley.

[h=2]No one believes the bond market[/h]

The fear that the economic recovery is faltering, in part because of the Delta variant of the coronavirus, appears to have receded among stock investors. Bond buyers, though, are still spooked. The yield on 10-year Treasuries has been dropping for months and remains at just under 1.3 percent, near the lowest it has been since February, when the prospects for the economy were much shakier. Who to believe?

A drop in yields usually signals slower growth ahead, which seems at odds with what’s happening. Yes, the Delta variant has put some reopening plans on hold, but generally the economy appears to be headed up rather quickly. Most economists think 2021 growth will be the strongest since the mid-1980s.

That’s led some Wall Street strategists to conclude that the bond market is broken.

Goldman Sachs said in a note to clients yesterday that the monthslong drop in bond yields was a “conundrum,” but meaningless. Rates would reverse soon.

Vincent Deluard, a global macrostrategist at the institutional brokerage firm StoneX, says the long-held belief that bonds are somehow better able to predict the economy than stocks doesn’t make sense in our current situation. The Fed’s stimulus included a heavy dose of bond buying, distorting the market. And the popularity of target date funds, which balance stocks and bonds based on investors’ projected date of retirement, is also moving bonds for reasons unrelated to the economy. “I find it hard to take seriously that the bond market is saying that we are not going to have inflation and a hot economy,” Deluard said.

Tom Atteberry, who runs the FPA New Income bond fund, one of the most conservative around, says there is another possibility: Economic rebounds have been getting successively slower. Growth peaked around 5 percent in the 1990s, 4 percent in the mid-2000s and 3 percent before the pandemic.

The big difference this time is that the government has spent trillions to pull the economy out of a deep recession. What if that masks something fundamentally awry? What if growth has already peaked? What if the new long-term ceiling is even lower than before? Atteberry considered this, “but then I come back to ‘nah,’” he said. “Rates are going to rise and the economy is going to do a lot better than it is now.”

Want to share The New York Times with your friends and family? Invite them to enjoy unlimited digital access to our journalism with this special offer.

[h=3]THE SPEED READ[/h]

Deals

The Carlyle Group is reportedly in discussions to raise a $27 billion buyout fund, which would be the industry’s largest. (Bloomberg) Shares of the Indian food-delivery company Zomato jumped 80 percent on their first day of trading, despite worries about its punchy I.P.O. price. (BBC) The delivery start-up Gopuff is in talks with investors, including Blackstone, to raise $1 billion. (TechCrunch) “Grills Are the Latest Fad in a Scorching IPO Market” (WSJ) The former baseball star Alex Rodriguez’s venture capital firm backed the online brokerage start-up Tornado in hopes of riding the retail investor frenzy. (Bloomberg)

Policy

What the U.S. can learn from Europe’s experience with national health passes. (NYT) The White House-Facebook coronavirus battle distracts from the real problem: We don’t agree on anything. (NYT) President Biden has installed more federal judges in his first six months than any president since Nixon. (Axios) “Congress Shouldn’t Risk Making Inflation Worse” (Times Opinion)

Best of the rest

One of the fastest growing, and most controversial, private equity firms is made up of other private equity firms. (FT) Twitter and Snap both beat earnings expectations, as the advertising market recovers. (NYT, CNBC) “What’s the Price of an Uncleaned Hotel Room?” (NYT) Crocs, the unofficial shoe of the pandemic, says sales will rise 60 percentthis year. (Elle, CNBC) Where is Larry Page? The Google co-founder has reportedly spent time on remote Fijian islands cut off from most travelers during the pandemic. (Insider)

Thanks for reading! We’ll see you tomorrow.

We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.

Continue reading the main story

 

[Bozzie]

Un-freaking real

https://www.bloomberg.com/news/arti...ll-street-by-storm-again-in-record-dip-buying

 

[CoachCB]

BABA is under $200, down 5% this morning. WTF???

 

[Bozzie]

BABA is under $200, down 5% this morning. WTF???

Heres why
More CCP crack downs,,,,investors are running.

Tencent

https://www.bloomberg.com/news/arti...oes-deepen-as-mainland-investors-turn-sellers