- A flurry of inflation jitters clobbered tech stocks on Monday as the Nasdaq dropped 2.4% for its worst day since March. The yield on the 10-year Treasury note also rose 3 bps to 1.6% - hitting growth names that depend on low rates to fuel their expansions - while the DJIA snapped a 5-session winning streak after pushing above the 35,000 milestone. Things don't look better this morning, with Nasdaq futures off 1.4% and weighing on the broader market. Contracts linked to the Dow and S&P 500 are 0.6% and 0.9% lower, respectively, while most of Europe and Asia are also in the red.
Time to buy puts? Shares of semiconductor companies were among the biggest decliners, along with cloud companies, while Big Tech stocks came under pressure. Facebook (FB) is down 2% premarket to $300/share, after tumbling 4% on Monday, while Tesla (TSLA) slid another 3.5% to $606/share after sinking 6.5% in the previous session. The plunge is also weighing on Cathie Wood's ARK Innovation ETF (ARKK) - in which Tesla is the top holding - as the notable growth fund slipped another 3% premarket to the $100 level (it fell 5% on Monday and is off 35% from its peak).
Meanwhile, prices are rising everywhere. Some are tied to commodities, which are getting scooped up at a record pace as the global economy emerges from the coronavirus pandemic. Consumer products are rising for the same reason, but have also been affected by supply chain shortages and logistical logjams. While some spikes could be temporary, like gasoline futures that whipsawed due to the closure of the Colonial Pipeline, economists hope the same will occur for the broader industry as supply moves to match demand.
Get ready for CPI: Inflation data will come tomorrow, but economists are already penciling in a price rise of 3.5% in April. While consumers and investors might be alarmed, the Federal Reserve isn't. The central bank has said it is comfortable allowing inflation to run past its 2% target for a while as it views the pickup in prices as "transitory." Others are more concerned about the outlook, fearing a sooner-than-expected interest rate rise, and equities may be at a disadvantage given the uncertainty. (15 comments)
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| | Top News  Shutterstock A flurry of inflation jitters clobbered tech stocks on Monday as the Nasdaq dropped 2.4% for its worst day since March. The yield on the 10-year Treasury note also rose 3 bps to 1.6% - hitting growth names that depend on low rates to fuel their expansions - while the DJIA snapped a 5-session winning streak after pushing above the 35,000 milestone. Things don't look better this morning, with Nasdaq futures off 1.4% and weighing on the broader market. Contracts linked to the Dow and S&P 500 are 0.6% and 0.9% lower, respectively, while most of Europe and Asia are also in the red.
Time to buy puts? Shares of semiconductor companies were among the biggest decliners, along with cloud companies, while Big Tech stocks came under pressure. Facebook (FB) is down 2% premarket to $300/share, after tumbling 4% on Monday, while Tesla (TSLA) slid another 3.5% to $606/share after sinking 6.5% in the previous session. The plunge is also weighing on Cathie Wood's ARK Innovation ETF (ARKK) - in which Tesla is the top holding - as the notable growth fund slipped another 3% premarket to the $100 level (it fell 5% on Monday and is off 35% from its peak).
Meanwhile, prices are rising everywhere. Some are tied to commodities, which are getting scooped up at a record pace as the global economy emerges from the coronavirus pandemic. Consumer products are rising for the same reason, but have also been affected by supply chain shortages and logistical logjams. While some spikes could be temporary, like gasoline futures that whipsawed due to the closure of the Colonial Pipeline, economists hope the same will occur for the broader industry as supply moves to match demand.
Get ready for CPI: Inflation data will come tomorrow, but economists are already penciling in a price rise of 3.5% in April. While consumers and investors might be alarmed, the Federal Reserve isn't. The central bank has said it is comfortable allowing inflation to run past its 2% target for a while as it views the pickup in prices as "transitory." Others are more concerned about the outlook, fearing a sooner-than-expected interest rate rise, and equities may be at a disadvantage given the uncertainty. (15 comments)
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| Covid The FDA, for the first time, has cleared a coronavirus vaccine's use in adolescents aged 12 to 15, paving the way for many to be immunized before summer camp and the new school year in the fall. "The light at the end of the tunnel is growing, and today it got a little brighter," President Biden said in a statement. At least 55M people in the U.S. have so far been vaccinated with Pfizer-BioNTech's (PFE, BNTX) jab, according to the CDC, including about 2M 16- to 18-year-olds.
The next step will see a committee of experts - that advise the CDC - meet tomorrow to review Pfizer's study data and decide whether to recommend the shot for youths. The federal government is meanwhile working with states, pediatricians and pharmacy chains to determine the logistics of administering the vaccines to children.
Data: Pfizer's shot demonstrated 100% efficacy in an ongoing placebo-controlled trial with 2,260 participants between the ages of 12 and 15 years old. Pfizer also recently said it expects to ask the FDA in September to authorize its vaccine's use in children 2 to 11 years should ongoing studies prove positive. Moderna (MRNA) is also studying its vaccine in children and J&J (JNJ) has said it is in talks with regulators to do so.
Go deeper: The expansion would be a major development in the country's vaccination campaign, but is likely to divide parents between those who are eager to expand the level of immunity and those that are skeptical about long-term side effects (the shots are currently authorized for emergency use rather than fully approved). With much of the world banking a surplus of vaccines made in the U.S., the use also raises questions about whether the supply should be targeted to an age group that so far appears to be mostly spared from the severe effects of the disease. (18 comments)
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| Global China's population growth is expanding at its slowest pace since the 1950s, according to census data from the past decade, with the numbers on mainland China increasing 5.38% to 1.41B. The working-age population - people aged 15 to 59 - is on the decline as well, after hitting a 2011 peak of 925M, while the fertility rate was only 1.3 children per woman during 2020, missing a target of 1.8 that Beijing had set in 2016 (after replacing its one-child policy). China's statistics agency even took an unusual step by announcing that the population did grow in 2020, but gave no total, prompting some to speculate it was an effort to pacify investors and corporations.
Race against time: At issue is whether the world's second-largest economy may already be in irreversible population decline before accumulating the household wealth of G7 nations. While China has eased birth limits, couples have been put off by the high cost of living (especially in cities), cramped housing (many share apartments with their parents) and career choices (job discrimination faced by mothers). Childcare is also expensive, maternity leave is short and most single mothers are excluded from medical insurance or social welfare payments.
Thought bubble: Japan, Germany and other rich countries face similar challenges of supporting aging populations with fewer workers, but services play an important part in their economies and they have spent decades of investment on factories, technology and foreign assets. On the other hand, China is a middle-income economy that is highly based on manufacturing and labor-intensive farming. While the ruling Communist Party has proposed a series of economic reforms, it's not yet clear if they will be large enough to ease strains on the nation's underfunded retirement system.
What about the U.S.? Births in 2020 fell for the sixth consecutive year to the lowest levels since 1979, according to data from the CDC, and the figures probably have little to do with the pandemic (most babies were conceived beforehand). Total fertility rates and general fertility rates have also declined by 4% since 2019, notching record lows. "The United States is presently moving below replacement fertility levels, which is not good for the economy," said Adina Batnitzky, a sociology professor at University of San Diego. "We will eventually have fewer working adults caring for the elderly, which further challenges our Social Security system," added Pamela Smock, a demographer for the University of Michigan-Ann Arbor. (13 comments) |
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