Tuesday, January 5, 2021

US stocks trade mixed as investors await Georgia run-off elections

Mike SegarReuters Voters line up early on Tuesday to cast their ballots in the US Senate runoff election in Marietta, Georgia. Mike SegarReuters US stocks were mixed on Tuesday morning as investors awaited the results of the two runoff elections in Georgia that will determine which party controls the US Senate. Monday was the stock market s first negative trading session to start a year since , as investors nervously eyed rising coronavirus cases in the US and renewed lockdown restrictions in the UK. New York state also confirmed its first case of a new virus strain. US stocks were mixed on Tuesday morning as investors awaited the results of the two runoff elections in Georgia that will determine which party controls the US Senate. John Stoltzfus, Oppenheimer s chief investment strategist, said it appeared that the market had priced in a Republican victory in at least one of the elections. He predicted that the S&P could fall by as much as % if Democrats flip the Senate. reased uncertainty over taxes and spending could likely weigh on the equity market at least until the intentions of the Biden Administration are given greater definition as to what a new tax regime might look like and how much any expansion of the government and its services would cost, Stoltzfus said in a note on Monday. Monday was the stock market s first negative session to start a year since , as investors eyed increasing coronavirus cases. The UK announced a full national lockdown in England until at least mid-February to combat the surge in COVID- cases and a new strain of the virus. New York Gov. Andrew Cuomo said Monday that the state had confirmed its first case of the new strain. : A crypto CEO breaks down why he would not be surprised to see Bitcoin and rise at least % in - and says the current sell-offs are a very natural and healthy thing The billionaire fund manager Bill Ackman s Pershing Square delivered a % return on its investments in , breezing past the benchmark S&P s % gain for the year and surpassing its record of % set in . Twitter founder Jack Dorsey published an open letter on Monday attacking proposed US government regulation that would require companies to collect the names and addresses of people making large cryptocurrency transactions. The regulation is designed to make it easier for law enforcement to track illicit transactions, but Dorsey said it would have the opposite effect. Oil prices were higher. West Texas Intermediate crude rose .%, to $. per barrel. Brent crude, oil s international benchmark, was up . %, to $. per barrel. : Wall Street strategists break down why they are bracing for more volatility if the Democrats sweep the Senate - and share what stocks to watch as the Georgia elections play out

Europe’s Trillion-Euro Bond Binge Gets Going With Italy, Ireland 

-- The euro area’s first bond sales of the year showed there is no letup in investor appetite for the region’s government debt. Italy received more than billion euros $ billion of bids for a -billion-euro benchmark offering on Tuesday -- just shy of record demand set last year. Ireland saw more than billion euros of interest for . billion euros of its -year syndicated debt, according to people familiar with the matter who asked not to be named. Euro-area governments will raise over trillion euros of debt this year, according to ING Groep NV, as they battle the economic fallout of the pandemic. Thanks to the European Central Bank’s bond-buying program, demand will more than offset the extra supply and continue to support a blistering rally that has pushed borrowing costs to all-time lows. While the heavy bidding for both nations’ debt fell short of records last year, the demand for Italy was just three billion below, making it among the biggest ever seen globally. It was set to price at eight basis points above existing bonds. “For Italy particularly the guidance looks attractive,” said Imogen Bachra, European rates strategist at NatWest Markets. “There will be lots of supply for the market to take down in the next few weeks.” Ireland’s sale, set to price at two basis points below midswaps, was beneath initially more generous guidance of one basis point above. The timing of the sale is fortuitous for the Irish government, with -year yields touching a record low of minus .% Monday. Equivalent Italian securities fell to an unprecedented .% in December. Bonds have been supported so far this year by concerns that the latest wave of the coronavirus will hamper the economic recovery before vaccines are rolled out to a significant proportion of the population. While the last-minute trade accord between the U.K. and the European Union has removed the risk for the region of a disorderly Brexit, Italy is facing renewed political uncertainty. Still, BNP Paribas expects only short-term price pressures, while Danske Bank AS highlighted the sizeable European Union funding that should help to support its bonds. “The Italian ministry of finance also have a massive cash account and with the SURE and EU next generation funds,” said Jens Peter Sorensen, chief analyst at Danske, who is recommending investors buy Italian bonds versus their Spanish counterparts. “They have plenty of cash even if Italian politics go ‘crazy’.” Slovenia, once again the the first eastern European nation to hit the euro-denominated debt market at the start of the year, was also selling -year bonds via banks and a tap of a security.

Apple names former newspaper editor Monica Lozano to board 

Apple said on Tuesday that it has named Monica Lozano, chief executive officer of College Futures Foundation, to its board. Lozano also serves on the boards of Target and Bank of America. Lozano is also a former board member of The Walt Disney Company. Provided by CNBC People seen outside the Apple store at Marina Bay Sands. In a shape of a giant orb, Apple s third retail store, Apple Marina Bay Sands officially opened on September this year. Apple has named Monica Lozano, chief executive officer of College Futures Foundation, to its board, the company said Tuesday. Prior to her role as CEO of the College Futures Foundation, Lozano worked as an editor and publisher at the largest Spanish-language paper in the U.S., La Opinion. She also served as chairman and CEO of the paper s parent company, ImpreMedia and currently serves on the boards of Target and Bank of America. She s a former board member of The Walt Disney Company. Lozano brings with her a broad range of leadership experience in the public and private sectors, as well as a long and storied track record as a champion for equity, opportunity, and representation, Apple said on Tuesday.

Citi appoints Lucy Baldwin as global head of independent research 

ReutersCHRIS HELGREN FILE PHOTO: The Citigroup logo is seen at the SIBOS banking and financial conference in Toronto Reuters - Citigroup on Tuesday appointed Lucy Baldwin as global head of its independent research business from April, the bank said in a memo. Baldwin, was the global head of equity sales at Credit Suisse Group AG, will join the bank as its head of markets and securities services and equity advisory. She is a former head of equity sales for Europe, Middle East and Asia at Bank of America Corp and was an analyst in the consumer sector at Goldman Sachs Group .

A $13 Trillion Debt Bill Comes Due for Big Economies 

-- The world’s biggest economies shouldering record debt burdens are about to confront an unwelcome legacy of the financial crisis: a $ trillion debt bill. The Group of Seven nations plus key emerging markets face the heaviest bond maturities in at least a decade, much of them borrowings to dig their economies out of the worst slump since the Great Depression. According to data compiled by , these governments may need to roll over % more debt than in . The good news is that both central banks and investors are on their side. Policy makers facing lingering economic challenges from the pandemic are likely to stay accommodative -- and keep borrowing costs low. Bonds remain a sought-after haven amid the virus’s rising toll on health and economies. ”Government debt ratios have exploded, but I believe that the short-term worrying over a rising debt is fruitless,” said Gregory Perdon, co-chief investment officer at Arbuthnot Latham. “Debt is leverage and assuming it’s not abused, it’s one of the most successful tools for growing wealth.” Refinancing needs are the biggest in the U.S., with $. trillion of debt coming due, followed by Japan with $. trillion, according to data. China’s tab rises to $ billion from $ billion last year. In Europe, Italy has the heaviest bill of $ billion, followed by France’s $ billion. Germany has $ billion due versus $ billion last year. Not all these maturities will necessarily be extended by fresh borrowings. To be sure, growth lift-off is still expected to translate into higher yields, with the median of economists surveyed by calling for a -year Treasury yield of .% by the fourth quarter, from .% currently. Yet the onus remains on the world’s policy makers to keep rates low to foster the global economic recovery. The Federal Reserve is on pace to buy nearly half the $ trillion of net supply TD Securities expects the U.S. government debt to issue this year. In Europe, the result of central bank bond buying will help create a supply shortfall of billion euros $ billion, according to Jefferies International. “The practical reality is that debt levels and rates are linked, because most of the developed world cannot afford higher interest rates,” said Steven Major, the global head of fixed income research at HSBC Holdings Plc.

UK's geothermal sector gets a boost with deal to power thousands of homes 

The companies claim it will be the first time geothermal electricity has been generated and sold in the U.K. Energy firm Ecotricity has signed a ten-year deal for electricity which will be produced by a British geothermal power plant, representing another step forward for the country s fledgling industry.    The company s power purchase agreement with Geothermal Engineering Limited GEL relates to the United Downs Deep Geothermal Power Project in Cornwall, southwest England. According to an announcement from GEL, electricity from the facility will be sent to Ecotricity customers via the National Grid. Power production is expected to commence in the spring of .   Both companies claim it will be the first time geothermal electricity has been generated and sold in the U.K. It s hoped thousands of homes will be powered through the deal.  News of the agreement was reported in The Sunday Times Magazine over the weekend. In a statement issued Tuesday, Dale Vince, the founder of Ecotricity, described geothermal as a really exciting form of energy that was currently untapped in the U.K. The United Downs project in Cornwall has been years in the making and utilizes two wells which are , and , meters , and , feet respectively deep. Described by the U.S. Department of Energy as a vital, clean energy resource, geothermal energy refers to producing renewable energy from underground heat. The DOE adds that geothermal energy supplies renewable power around the clock and emits little or no greenhouse gases. The application of geothermal energy is not restricted to powering homes. It s hoped that heat from the United Downs site will be used to mature and distil rum; and last year, the town of Penzance opened a geothermal pool which uses warm water from a well built by GEL. The company is also involved in a project with another firm, Cornish Lithium, that is looking to recover lithium from geothermal waters at the United Downs site. While the U.K. s geothermal sector is nascent it is more developed elsewhere. Iceland s National Energy ity says geothermal power facilities produce % of the country s total electricity production. According to preliminary data from the U.S. Energy Information Administration, geothermal power plants across seven states – California, Nevada, Utah, Oregon, Hawaii, Idaho and New Mexico – generated around billion kilowatt-hours in . This, it adds, was equal to .% of total U.S. utility-scale electricity generation.

Dow Moves Solidly Higher Ahead of Georgia Elections 

Stocks rose Tuesday as investors traded cautiously ahead of two key Senate runoff elections in Georgia. The elections in Georgia will determine whether the Democrats take control of Congress and allow them to push the legislative agenda of President-elect Joe Biden. A swing to the Democrats could lead to greater fiscal stimulus and higher taxes. Two Republican wins would balance the Senate and give the GOP enough votes to block Biden from pursuing his more ambitious policies on trade, energy and security, according to analysts. The Dow Jones Industrial Average rose points, or .%, to ,, the S&P gained .% and the Nasdaq was up .%. Stocks declined sharply Monday as Wall Street s optimism over the rollout of coronavirus vaccines was dashed by a climb in infections and fears of tougher restrictions and lockdowns. The S&P slumped .% on Monday, the index s The first day doesn t necessarily set the tone for the rest of the year, though, said Lindsey Bell, chief investment strategist for Ally Invest. The S&P s best year in recent history - - started with a small decline on the first day. It s a chance that the market will be up or down following a first day decline. Judging this market by Monday s drop could be shortsighted, too. There are reasons to be optimistic about . Covid vaccines are being distributed, earnings outlooks are improving, and the U.S. economy could be heading for a mid-year boom. Fiscal and monetary support also remain supportive, Bell added. China s three largest telecommunications companies, meanwhile, surged Tuesday after the New York Stock Exchange reversed its decision to delist the shares. China Mobile , China Telecom and China Unicom each jumped after the Big Board in a statement late Monday said it no longer intends to move forward with the delisting action. The NYSE cited consultation with relevant regulatory authorities for its reversal. NYSE s reversal was quite unexpected, Jackson Wong, director of asset management at Amber Hill Capital in Hong Kong, told . Some funds that had an obligation to unload these shares will now need to buy them back. Some investors are also starting to pricing in a scenario that the decision to halt delistings could be a start of a de-escalation in tensions between China and the U.S. Qualcomm QCOM shares were up less than % Tuesday after the chipmaker announced that longtime CEO Steve Mollenkopf would step down to make way for current president Cristiano Amon.

Bad news: Not everyone will qualify for a second stimulus check, even if they got the first one 

The second stimulus check is different from the first direct payment in more ways than one. For a start, eligible adults will receive only half the possible total, while child dependents will get more. And some groups left out of the first stimulus check will now be able to qualify for the second. Plus, the IRS and US Treasury have a tight deadline to hit this time around, and are therefore moving faster to send out the checks. The biggest change to qualifications has to do with the $ upper stimulus limit, but maybe not the way you think. It all comes down the formula the IRS uses to calculate how much of the $ check you and your family could receive. Because of that, some people who were eligible for the first check won t meet the income limit requirements for another payment. There are other issues that could keep you from receiving a second stimulus check through direct deposit, EIP cards and physical checks in the mail as well. We ll go over them all. While you re here, make sure you know your stimulus check rights and what s happening with a possible third stimulus check for . This story has been updated with new information. Some things changed with the second stimulus check that President Donald Trump signed into law Dec. . The per-person total is one of them, including a $ maximum for each adult down from $, per person in the first stimulus check, with another $ per child dependent up from $. One thing that didn t change is the formula the IRS uses to calculate your stimulus check total.  Because of some complicated stimulus-check math, more people will phase out of qualifying for a stimulus check payment sooner than they would have with a $, per person check, especially if they don t have children and under, the designated age for a qualified dependent. So for example, if you re a single tax filer with no qualified child dependents and your adjusted gross income, or AGI, on your tax return is between $, and $,, you would have received a portion of the first $, max stimulus check. But at a maximum of $ per adult, you would phase out of the second payment once you hit $,. Read up more in our second stimulus check calculator and try it for yourself. To determine your adjusted gross income, locate your tax statement. You ll find your AGI on line b of the federal tax form. When the first round of stimulus checks was sent, millions of young Americans were excluded from receiving either money to contribute to the family check, or a payment of their own. Those who were between the ages of and and who were also claimed as child dependents are in a kind of limbo due to the tax code definition of a child. So if you re or older, you re not considered a child under the new plan or the first stimulus check, even if you still live at home. Although some lawmakers pushed to include dependents of any age, the $ billion bill has kept the CARES Act definition from March, but increased the amount from $ to $ per qualified child. Note that even if you re not considered a child by stimulus-check definitions, you also may not be deemed an adult who would receive their own stimulus check. Here s how to determine if you count as an adult or a dependent for stimulus checks. Provided by CNET If you make more than the previous cutoff income, you likely won t qualify for a second check. Sarah TewCNET If you re a nonresident alien, you would not be eligible for a second stimulus check. The government defines a nonresident alien as someone who has not passed the green card test or the substantial presence test.   Note that you didn t have to be a US citizen to receive the first stimulus payment. Noncitizens must have a Social Security number and live and work in the US to receive a stimulus check under the CARES Act. The $ billion stimulus legislation makes it possible for families with a noncitizen spouse to qualify for a second stimulus check, even if they themselves are issued a taxpayer identification number ITIN by the IRS and not a social security number. The $ billion stimulus bill allows non-US citizens who have a US citizen spouse to receive a second stimulus check as part of their household, a change from the first payment rules. With the first check, if you re married to someone who is considered a nonresident alien, the two of you weren t able to receive the first stimulus check for yourselves or money for your dependents if you file your taxes jointly -- even if the qualifying parent and child are citizens of the US.  To receive the first stimulus check, you would both need to have a Social Security number or be a member of the US Armed Forces during the tax year. If you filed your taxes separately, the citizen may be eligible for a full or partial stimulus payment. The same went for US citizens who claim their child dependents as head of household on a separate tax return from the noncitizen spouse. With the second check, the family could be eligible as long as they met the other requirements.  The IRS sent almost . million payments totaling nearly $. billion to deceased individuals, according to the US Government Accountability Office, before asking for the money back. If someone has died since the previous tax filing, the IRS guidance with the first check is that families can t keep the money on their behalf -- for example, if the deceased filed taxes jointly with a spouse. An exception may be if you receive your spouse s Social Security survivor benefits.  With the second check, if your spouse died in and your AGI is less than $, a year, you would be eligible for the full $ amount. A precedent for this exists. Families were able to keep the stimulus checks from the  economic crisis in the event of a death, according to ProPublica and CNBC. If by accident a check is addressed to you and you wouldn t otherwise qualify, the IRS may expect the family to return the payment, though they may not be legally required to do so.  With the first stimulus check, if you owed child support payments by as much as $, the government gave states the right to garnish the amount you needed to pay. For example, if you owed $,, your entire stimulus check would go to your child s other parent. If you owed $, that amount would be taken out of your stimulus check. The rules surrounding the new $ stimulus check would let people in this group hold onto the cash without their check being garnished to pay overdue child support. The current law in place wouldn t block people in jail or prison from getting the second stimulus payment Originally, people in jail and prison were deemed by the IRS to be eligible to receive a stimulus check, and then they were interpreted as ineligible. But a ruling by a federal judge in California allows inmates to file for the first stimulus payment online by Nov. , noting that the CARES Act didn t explicitly ban this group.  The IRS has appealed this decision but has sent paperwork to prisons for inmates. Right now, incarcerated people would be entitled to a second stimulus check. If you re still confused about whether you ll be eligible for the next stimulus payment, here s who may qualify for a second stimulus check. Also, you may not get a stimulus check if you move and forget to file a change of address. Plus, here s when the IRS could send the second check, if approved.

Apple's upcoming iPhone privacy feature exposes Facebook and Snap to most risk compared to their peers, analysts say 

MKM Partners analysts say some online ad companies like and Snap will be more exposed to the impacts on mobile advertising due to Apple s privacy changes compared to other companies. Apple s change is expected to dramatically impact the ability of advertisers to target ads the way they have been, since people likely won t opt in to letting apps track them. Provided by CNBC Apple CEO Tim Cook delivers a keynote during the European Union s privacy conference at the EU Parliament in Brussels, Belgium October , . As the industry prepares for Apple s change to settings on users iPhones in the name of privacy, MKM Partners analysts said Tuesday some online ad companies like and Snap will be more exposed to the impacts on mobile advertising than their peers.  Apple s change will take a privacy option for users to share their advertising ID, or IDFA, that was previously buried deep in users phones and put it front and center when they open an app. Before using an app like that tracks your data for targeted advertising, you ll be asked to enable the tracking. Companies like fear Apple s notice will discourage people from enabling tracking, therefore limiting their ability to target ads, the core of their businesses. Players in the industry currently use that ID, when it s available, to target ads and measure how effective they are. But the change is expected to dramatically impact the ability of advertisers to target ads the way they have been since people likely won t opt in. MKM analysts said they created a framework based on seven factors to determine the risk of online ad companies on the change. The factors include scale, access to first-party data, exposure to iOS devices, relative revenue contribution from app install ads, off-platform ads, ads purchased by small businesses and ads purchased by industries relying heavily on paid mobile user acquisitions. Broadly, those companies include those in the gaming, dating, ride-sharing and streaming video.  The analysts said based on these parameters, and Snap have the highest potential headwind due to IDFA changes, followed by Twitter and Pinterest. They said Google and Amazon have the lowest relative exposure.  However, when it comes to gravitational pull, relative ad efficacy, and access to st party data vs. other sub-scale platforms, programmatic ad networks and publishers, we expect the Big Six online ad companies to fare better than the rest of the industry, they wrote. We expect more attention on this issue as we approach Q earnings outlook, and we d be buyers on weakness, particularly of FB and SNAP shares, attributable to upcoming iOS changes.   In a December note, Bank of America analysts also said and Snap are most at risk of the changes, potentially creating a % revenue headwind for and a % headwind for Snap. They argue Twitter has some modest exposure to mobile app downloads, but the exposure is relatively small compared to and Snap. Pinterest and Google are the least exposed to IDFA, they said.  has been outspoken about the change, most recently running newspaper ads, publishing a new website and running a blog post outlining its arguments opposing Apple over the change it claims threatens the personalized ads that millions of small businesses rely on to find and reach customers.  , in its blog post, argued that Apple s new tracking rules are about profit, not privacy, and said it believes Apple is behaving anticompetitively by using control of the App Store in a way that benefits its bottom line at the expense of developers and small businesses. Apple told CNBC that the privacy feature gives iPhone users more control and transparency over how their data is tracked and used for advertising, and that apps will be able to explain the benefits of tracking to users in the prompt. Provided by CNBC A mockup of the popup window iPhone users will see before using an app that tracks their data. This image was provided by Apple. In outlining bull arguments for the ad ecosystem as it pertains to the IDFA changes, MKM said companies with scale and access to first-party data will benefit as ad dollars gravitate toward those kind of platforms. They also said the ad ecosystem has already been dealing with a growing focus on privacy and that secular trends have become stronger despite headwinds caused by privacy regulation.  But they said mobile ad efficacy could also decline as measurement will be more fuzzy, and said companies with limited first party data will face headwinds, MKM said in describing its bearish arguments. They also wrote that off-platform advertising could become less effective as cross-device advertising might not be able to rely on the same device signals they did before.

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