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It can be hard to keep up with everything going on in the markets. Here is a chart-heavy spin through some of the big stories you need to know.
📈 Approaching another record. What pandemic? The S&P 500 came within a whisker of a record yesterday — it needs to close above 3,386.15, for those keeping score — defying the warnings of economic damage from the coronavirus. The index is up about 50 percent from its lowest point this year, nearly regaining all of the ground lost in a short but sharp bear market in the early stages of the pandemic.
✈️ Flying high (well, higher). U.S. airline stocks have gained about 15 percent over the past two weeks, amid signs that a resurgence in recorded virus cases hasn’t deterred some travelers. Sunday was the third-best travel day of the pandemic, according to airport security screening stats, at 31 percent of the number of people screened on the same day last year — but there is still a long way to go for a full recovery.
🎮 Playing games. Video game stocks have gained more than 50 percent this year, making them an even bigger quarantine-era hit than Netflix, which has gained around 40 percent over the same time, as Bloomberg points out. All of the time people have spent with new games — many of which charge recurring subscriptions — could give the sector momentum after economies reopen, analysts say.
🚗 Tesla’s irrational exuberance. There are many reasons that Tesla is one of the hottest stocks around, but the 13 percent gain yesterday after news of its 5-for-1 stock split — adding more than $30 billion in market capitalization — is one of the weakest. Nothing about the business has changed, and although it makes buying a single share more accessible, most brokers, including Robinhood, already allow investors to trade fractional shares.
Here’s what is happening
Wear a mask to save the economy, Fed officials say. “Common-sense precautions” to limit the spread of the coronavirus are less costly than reimposing shutdowns, Eric Rosengren, the president of the Boston Fed, said in a speech. The economic recovery has been “muted” by patchy “adherence to protocols” like wearing masks, said the Dallas Fed president, Robert Kaplan, in a speech: “While people may feel freer, the economy will grow slower,” he said.
Sumner Redstone, “Hollywood brawler,” died at age 97. The media mogul’s relentless deal making transformed a string of drive-in movie theaters into the sprawling ViacomCBS conglomerate. As The Times’s Ed Lee puts it: “He wasn’t so much an innovator as he was a maximum opportunist. He didn’t invent new forms of entertainment; he used cagey maneuvers to build an empire. He had the gall to borrow ungodly sums to close a deal. He loved to buy things. He loved to sue his rivals.”
The Chinese Communist Party elite have a big financial stake in Hong Kong. Relatives of three of the top four party leaders have bought luxury real estate in the city valued at more than $51 million, a new investigation by The Times reveals. Among them is the daughter of Li Zhanshu, who oversaw the introduction of China’s contentious national security law in Hong Kong, drastically curbing political protest and dissent.
New Zealand’s infection-free streak is over. Before this week, the country had gone more than 100 days without new locally transmitted coronavirus cases. Today, it reported 13 more such infections, possibly linked to freight, bringing its active cases to 36. Yesterday, it reimposed a lockdown in Auckland.
News without a newsroom. The Daily News, once the largest-circulation newspaper in the U.S., is permanently closing its newsroom in Lower Manhattan. The pandemic’s effect on advertising revenue led the tabloid’s owner, Tribune Publishing, to “reconsider our need for physical offices.” In other office news, retailer REI is putting its nearly complete, never-used corporate campus in Seattle up for sale, deciding instead to distribute its employees across multiple sites.
What is Warren Buffett buying?
Speaking of markets, investors will get a look at what the Berkshire Hathaway chairman has been buying and selling when his company files its quarterly 13F document, which will detail its stock holdings at midyear. The form is due by the end of the day tomorrow.
Wall Street calls the afternoon document dump “whale watching,” because investors pore over filings from the likes of Berkshire and other big market players to see what the “smart money” is doing. Some investors try to get ahead of the news by making their own guesses.
• One piece of chatter doing the rounds is about Berkshire’s $9 billion stake in Wells Fargo. Based on potential clues in Berkshire’s recent earnings reports — omitting mention of the bank as a top-five holding in its latest report, along with a multibillion-dollar drop in the cost basis of the group’s “banks, insurance and finance” portfolio — some think that Mr. Buffett may have dumped the stock.
• Berkshire said last month that it had added more than $500 million to its holding of Bank of America, so Mr. Buffett’s conglomerate is not sour on banks in general. But we’ll soon know for sure.
More charts? More charts!
We’re not done yet.
📸 Pivot to pharma. In the latest twist to the saga of Kodak’s shift from photography to pharmaceuticals, the U.S. government said it would hold off extending a $765 million loan for the retrofit pending an investigation into the circumstances of executive stock option awards around the time of the loan’s announcement, which sent the company’s shares soaring. Recent lobbying activity and charity donations by people connected with the company are also attracting scrutiny.
🇭🇰 Sending a message. On Monday, police officers raided the office of Hong Kong’s biggest pro-democracy newspaper and arrested its owner, Jimmy Lai, using the powers of a new national security law. Supporters of the media company, Next Digital, bought its stock as a show of solidarity, producing a huge, fleeting spike in its share price. Mr. Lai, who was released yesterday, vowed a “long-term fight” for democracy.
🔑 An update on Hertz. One of the most unexpected market moves in recent months was the car-rental company Hertz’s attempt to sell up to $500 million in new shares after it filed for bankruptcy protection in May. In a filing this week, Hertz said it had sold $29 million in shares before the S.E.C. put a stop to the action. The shares are now trading below where they were before the Chapter 11 filing, and well below the subsequent urge driven by day traders that led the company to try to issue new stock that may be worthless once a restructuring is complete.
🚚 A garbage deal. The electric-truck maker Nikola announced an order for up to 5,000 sanitation trucks, which it said it would deliver starting in 2023. The company, which went public by merging with a “blank check” company this year, gained $3 billion in market value on the news. It is now valued at around $16 billion, about the same as Subaru, despite not having sold a single vehicle.
💉 Promises, promises. The Times’s David Gelles and Heather Murphy dug into the history of Inovio, a Pennsylvania biotech company, that has spent years claiming to be on the cusp of important vaccines. Although it has never brought one to market, the news of its trials has repeatedly sent its shares spiraling higher — the latest (and biggest) following news of a potential Covid-19 treatment, with past bumps trailing announcements about swine flu, Zika and even a “cancer vaccine.”
The speed read
• Goldman Sachs and Barclays are reportedly among the bidders to acquire the credit-card business of General Motors, which has $3 billion in outstanding balances. (WSJ)
• Palantir is reportedly planning to go public late next month, via a direct listing. (Bloomberg)
• “Can SPACs shake off their bad reputation?” (FT)
Politics and policy
• The U.S. said it would keep a 15 percent tariff on Airbus aircraft and shift related levies on products from Britain and Greece to items imported from France and Germany. (CNBC)
• Despite tough gun-control laws, Britain’s police say that firearms are being smuggled into the country in increasing numbers from the U.S. (NYT)
• Google, Facebook and other tech companies met with U.S. government agencies yesterday to share insight in the battle against disinformation in the run-up to November’s elections. (NYT)
• President Trump’s restrictions on WeChat could make it harder to download the popular app on iPhones in China, rendering them “electronic trash.” (Bloomberg)
Best of the rest
• Banks are upgrading their surveillance capabilities of traders who work from home. (Bloomberg)
• A 107-page safety manual, temperature scanners and vacuum-sealed meals: Filming for “Jurassic World: Dominion” is a post-pandemic test for Hollywood. (NYT)
• A forensic examination of Elon Musk’s emoji usage. (Emojigraph)
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Business News - Opportunities - Reviews