Top News  Shutterstock Stocks inched higher Friday to finish in the green for the week, as optimism over the post-pandemic U.S. economic recovery drove the investment narrative heading into the Memorial Day weekend. Stocks gained despite a 0.7% increase in the core personal consumption price gauge for April that was the biggest monthly gain since October 2001. The focus instead fell on the consumer, with purchases of goods and services rising 0.5% in April after an upwardly revised 4.7% jump in March, the biggest since last June. Finally, President Biden issued his first full budget proposal, detailing more than $6 trillion in spending over the coming fiscal year, but Treasury yields edged lower for the week, with benchmark 10-year yield down three basis points to 1.58%    | TOGETHER WITH  |
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| | Top News Shutterstock Stocks inched higher Friday to finish in the green for the week, as optimism over the post-pandemic U.S. economic recovery drove the investment narrative heading into the Memorial Day weekend. Stocks gained despite a 0.7% increase in the core personal consumption price gauge for April that was the biggest monthly gain since October 2001. The focus instead fell on the consumer, with purchases of goods and services rising 0.5% in April after an upwardly revised 4.7% jump in March, the biggest since last June. Finally, President Biden issued his first full budget proposal, detailing more than $6 trillion in spending over the coming fiscal year, but Treasury yields edged lower for the week, with benchmark 10-year yield down three basis points to 1.58% | |
| Media Amazon (AMZN) put up some big bucks in the streaming wars, reaching a deal to acquire MGM (OTC:MGMB) for $8.45B. The purchase was the second largest in the tech giant's history, behind its $13.7B transaction for Whole Foods in 2017. With MGM, Amazon will get a library of more than 4,000 films, including franchises like James Bond and Rocky, classics such as The Silence of the Lambs and 12 Angry Men, as well as critically acclaimed shows like The Handmaid's Tale.
Big pockets: While Amazon hasn't had the massive creative successes seen at Netflix (NFLX) and newcomer Disney+ (DIS), it does have the spending power to boost its position in the industry. On top of bolstering its Prime Video offerings, Amazon struck a recent deal with the NFL for exclusive rights to Thursday Night Football at a price of $1.2B a season over 11 years. In total, Amazon spent $11B on content last year, up from $7.8B in 2019.
One of the fastest-growing parts of Amazon's business is advertising and the MGM acquisition will allow the company to attach all sorts of ads to its new content. It could also create a fresh vertical with endless possibilities of what Amazon can do with a movie studio. Some say it won't change the face of Hollywood, though others are more skeptical given Amazon's dominance and the sway it has in many marketplaces.
Analyst commentary: In the race for scale that has ensued with every major media company jumping into streaming, the transaction "will likely distance Amazon's Prime service from rivals that will (or do) offer a similar service," writes Citi's Jason Bazinet. "For a reasonable multiple, the deal ensures that Amazon has access to high-quality content as more media firms accelerate their direct-to-consumer pivot. In the aftermath of several streaming launches, Prime Video, Disney+ and perhaps Paramount Plus (VIAC) are the rivals arguably seen with enough scale to keep up with leader Netflix in the space." (179 comments)
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| Covid Half of the adults in the United States, more than 129M people over the age of 18, are now fully vaccinated against the coronavirus, according to data from the CDC. Nine states - Connecticut, Hawaii, New Hampshire, New Jersey, New Mexico, Maine, Massachusetts, Rhode Island and Vermont - have even inoculated 70% of their adult population with at least one dose. The milestones come nearly two weeks after the CDC relaxed social distancing and mask requirements for the fully vaccinated, paving the way for many states to ease additional restrictions.
By the numbers: Among people in the U.S. aged 65 and up (a demographic that faces far greater health risks), nearly 74% have been fully vaccinated. The entire nation also opened up jabs to anyone over 16 in the middle of April, and the FDA approved the Pfizer-BioNTech (PFE, BNTX) vaccine for anyone over 12 nearly two weeks ago. Nearly 5M of these adolescents have received at least one dose of the vaccine, according to the CDC.
Meanwhile, tensions continue to surface over tracing the origins of the coronavirus pandemic. Washington is calling for a fresh round of investigations to be conducted with independent and international experts, although Beijing considers the probe in its country to be fully complete. Earlier this year, a team of scientists summoned by the WHO spent a month in China, but the group was largely confined to reviewing Chinese state research and some of the members expressed frustration that they weren't given full access to data.
Quotes: "The purpose of the inquiry is not to assign blame, but to be grounded in science, to find the origin of the virus, and the outbreak, and to help us all prevent future global catastrophes from happening," noted Jeremy Konyndyk, executive director for COVI-19 at the U.S. Agency for International Development. While it's more likely the coronavirus jumped from an animal to humans, "we don't know 100% the answer to that," added Dr. Anthony Fauci on Tuesday, saying it was "imperative that we do an investigation." CDC Director Dr. Rochelle Walensky has also acknowledged a "possibility" that COVID-19 spread through an accidental lab leak. (206 comments) | |
| Energy The reputation of black gold got more tarnished on Wednesday as a trifecta of trouble hit the oil industry. While environmental groups and activist investors have stepped up the pressure in recent years to address concerns about climate change and fossil fuels, some of these historic defeats are being looked at as a watershed moment that will shift the oil-and-gas landscape. Shareholders, investment giants and lawmakers are increasingly raising their voices about a sustainable future, while some even see the transition as a way to secure future profits given changing trends and an ESG world.
Exxon - Activist hedge fund Engine No. 1 won at least two board seats on the company's board, which will likely force it to confront growing concerns about climate action. While it's still too soon to gauge what the green-tinged members will do, fundamentally, it was a blow to the oil major and shows that shareholders are no longer buying a permanent future in the oil-and-gas arena. The Exxon (XOM) battle was one of the biggest proxy shocks in Wall Street history, especially for a campaign that only began last December.
Chevron - Shareholders voted 61% to cut emissions from the end-use of its fuels, while the firm barely lost a non-binding vote calling for a report on the business impact of achieving net-zero emissions by 2050. The decision signals a "new sense of urgency," said Mark van Baal, who leads a climate advocacy group that placed resolutions calling for emissions cuts at Chevron (CVX) and elsewhere. Earlier this month, ConocoPhillips (COP) shareholders also rejected the company's board to support a similar push for a full-scope emissions reduction target.
Shell - Emissions goals were deemed insufficient by a Dutch court, which ordered the oil major to curb its carbon outflows by 45% by 2030 compared with 2019 levels. It also said that Shell (RDS.A, RDS.B) was not only responsible for lowering its own direct emissions from drilling and other operations, but also those of the oil, gas and fuels eventually burned by consumers. While Shell said it will appeal the ruling, Rystad Energy feels it has a "negligible chance" in court, and it also raises eyebrows on the company's decarbonization agenda that was considered one of the stricter plans in the industry. (329 comments) | |
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| Economy On Friday, President Biden released his fiscal year 2022 budget, which will serve as a blueprint for the administration's fiscal priorities. The $6T budget plan with its focus on infrastructure improvement and fighting climate change would take the U.S. to its highest sustained levels of federal spending since World War II. Funding for the agenda would be obtained by raising taxes on corporations and the ultra-wealthy, while consumer prices wouldn't rise faster than 2.3% per year and the Fed would slowly raise rates from their current rock-bottom levels.
What's in the request? The package is being driven by the American Jobs Plan and American Families Plan - two proposals that are estimated to cost more than $4T. The first piece of legislation centers around physical infrastructure like roads, bridges, broadband internet and EV charging stations. The second covers what the administration calls "human infrastructure," or social programs, such as affordable childcare, universal prekindergarten and a national paid leave program. It would also increase federal spending to $8.2T per year by 2031, meaning annual deficits of over $1.3T (and $1.8T in 2022).
The budget additionally contains funding for scientific research combating climate change, as well as investments in public service agencies like the CDC and EPA. Defense spending would also grow, especially the military's cyber force, though it would decline as a percentage of the overall economy. With regards to student loan forgiveness, Biden excluded the campaign promise from the proposal despite pressure from progressives to cancel up to $50,000 in debt per borrower.
Outlook: With Democrats in control of both chambers of Congress, Biden has better odds than any president in recent history for passing his agenda, especially if he can negotiate with lawmakers on parts of his infrastructure package. This time around, Democrats might also seek to pass the legislation under budget reconciliation if members in the House and Senate can pass an identical package. That would allow the budget to sail through the Senate via a simple majority, rather than the 60 votes needed for most bills or spending measures. (26 comments) | |
| Trending Is travel making a comeback? It sure looks like it, based on forecasts for Memorial Day weekend. More than 37M Americans are expected to travel from Thursday to Monday, which is up 60% from last year, according to AAA. The need to get out follows a successful coronavirus vaccination campaign, as well as a reduction in COVID-19 cases, and comes despite gas prices that have skyrocketed across the country (90% of travelers will be driving).
Bigger picture: Security lines have been stretched at the busiest U.S. airports, with 2.5M people expected to travel this weekend. Helping supply the ferocious demand is the launch of new U.S. budget carriers: Avelo Airlines and Breeze Airways. The two are targeting smaller airports and underserved routes, and could put more pressure on larger carriers like JetBlue (NASDAQ:JBLU), Southwest (NYSE:LUV), American (NASDAQ:AAL) and Delta (NYSE:DAL) if they survive. The last U.S. airline to launch, Virgin America, folded in 2018.
"It is night and day, compared to 2020," said Henry Harteveldt, an airline industry analyst at Atmosphere Research Group. "Hotels are booked full, companies like Airbnb (NASDAQ:ABNB) and Vrbo (NASDAQ:EXPE) say they are sold out in many communities, and rental cars are all but impossible to find."
Market movement: General Electric (GE) shares notched their highest close in three years on Thursday, surging 7.1% to lead the S&P 500, as Boeing (BA) and its suppliers rallied in response to news that rival Airbus (OTCPK:EADSY) was preparing to gear up production of its A320-series jets beyond pre-pandemic levels. Boeing is GE's second-largest customer while Airbus ranks third. The broad aerospace rally also touched Triumph Group (TGI), Spirit AeroSystems (SPR), Honeywell (HON), L3Harris (LHX) and Raytheon (RTX). (23 comments) | |
TOGETHER WITH  U.S. Indices
Dow +0.9% to 34,529. S&P 500 +1.2% to 4,204. Nasdaq +2.1% to 13,749. Russell 2000 +2.4% to 2,268. CBOE Volatility Index -16.8% to 16.76.
S&P 500 Sectors
Consumer Staples -0.4%. Utilities -1.6%. Financials +1.1%. Telecom +2.5%. Healthcare -0.7%. Industrials +1.9%. Information Technology +1.6%. Materials +0.6%. Energy 0.%. Consumer Discretionary +2.2%.
World Indices
London +0.1% to 7,023. France +1.5% to 6,484. Germany +0.5% to 15,520. Japan +2.9% to 29,149. China +3.3% to 3,601. Hong Kong +2.4% to 29,135. India +1.8% to 51,423.
Commodities and Bonds
Crude Oil WTI +4.8% to $66.66/bbl. Gold +1.2% to $1,903.6/oz. Natural Gas +3.7% to 3.012. Ten-Year Treasury Yield -0.5% to 131.82.
Forex and Cryptos
EUR/USD +0.12%. USD/JPY +0.84%. GBP/USD +0.3%. Bitcoin -3.3%. Litecoin +9.5%. Ethereum +9.6%. Ripple +2.7%.
Top Stock Gainers
Vertex Energy (NASDAQ:VTNR) +331%. AMC Entertainment Holdings (NYSE:AMC) +116%. SemiLEDs Corporation (NASDAQ:LEDS) +82%. Pieris Pharmaceuticals (NASDAQ:PIRS) +78%. eMagin Corporation (NYSE:EMAN) +68%.
Top Stock Losers
Shineco (NASDAQ:TYHT) -53%. NGM Biopharmaceuticals (NASDAQ:NGM) -47%. Larimar Therapeutics (NASDAQ:LRMR) -44%. Novan (NASDAQ:NOVN) -40%. EZGO Technologies (NASDAQ:EZGO) -29%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section. | |
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