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Tyson Foods (TSN) will require its workforce to be vaccinated, J.P. Morgan (JPM) is re-evaluating its back-to-the-office policies and Microsoft is requiring vaccinations for its returning workforce. In addition, Google parent Alphabet (GOOGL) has approved 85% of employee requests to work from home or relocate once its offices open, Bloomberg reports. Amid all those moves, Wall Street put together a rally from midday into the close, with recovery sectors leading the way.
Strength in cyclicals, which would be the hardest hit on worries about a stalled economic reopening, could indicate that investors feel the economy can weather moves to stem the spread of the Delta variant. That would be in contrast to last month, when the Delta spread was a major reason for sell-side strategists to hesitate on new allocations, according to BofA.
Looking for the peak. Thomas Lee of Fundstrat Global Advisors argues the company and locality moves will help by driving up vaccination rates.
"Policymaker panic about Delta variant is triggering a vaccination resurgence = good," Lee writes in a note. "The positive upshot of a panic by policymakers is that more Americans are getting vaccinated. The rise in vaccinations is most evident in states hit hardest by this recent Delta variant."
"Policymakers panic = good, businesses respond by pushing/mandating masks = good, businesses respond by pushing/requiring vaccinations = good, Americans witness COVID-19 severe illness and get vaccinated = good."
Fundstrat's base case is that the Delta variant surge in the U.S. will peak in August, which it says should encourage investors.
"Given August is already a poor liquidity month, a buyers strike makes markets more turbulent," Lee says. "But if our base case plays out, August will ultimately be a 'risk on' month and we will chop higher. Thus, the July chop will continue into August, but with an upward bias."
If "the Delta variant does not peak in the next few weeks (as is somewhat expected) then the chances of lockdowns will rise, and that will potentially impact earnings," Kinsale Trading writes.
If "the Delta variant is causing any sort of headwind on the economy, it'll show up in the service sector PMI first, as people pullback on eating out, etc," Kinsale says.
Wells Fargo says it does not think the Delta variant will be a "game changer" for the U.S. economy and sticks with its portfolio recommendation to favor cyclicals, especially Industrials (XLI) and Materials (XLB). Download Seeking Alpha for your Phone or Tablet
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Strength in cyclicals, which would be the hardest hit on worries about a stalled economic reopening, could indicate that investors feel the economy can weather moves to stem the spread of the Delta variant. That would be in contrast to last month, when the Delta spread was a major reason for sell-side strategists to hesitate on new allocations, according to BofA.
Looking for the peak. Thomas Lee of Fundstrat Global Advisors argues the company and locality moves will help by driving up vaccination rates.
"Policymaker panic about Delta variant is triggering a vaccination resurgence = good," Lee writes in a note. "The positive upshot of a panic by policymakers is that more Americans are getting vaccinated. The rise in vaccinations is most evident in states hit hardest by this recent Delta variant."
"Policymakers panic = good, businesses respond by pushing/mandating masks = good, businesses respond by pushing/requiring vaccinations = good, Americans witness COVID-19 severe illness and get vaccinated = good."
Fundstrat's base case is that the Delta variant surge in the U.S. will peak in August, which it says should encourage investors.
"Given August is already a poor liquidity month, a buyers strike makes markets more turbulent," Lee says. "But if our base case plays out, August will ultimately be a 'risk on' month and we will chop higher. Thus, the July chop will continue into August, but with an upward bias."
If "the Delta variant does not peak in the next few weeks (as is somewhat expected) then the chances of lockdowns will rise, and that will potentially impact earnings," Kinsale Trading writes.
If "the Delta variant is causing any sort of headwind on the economy, it'll show up in the service sector PMI first, as people pullback on eating out, etc," Kinsale says.
Wells Fargo says it does not think the Delta variant will be a "game changer" for the U.S. economy and sticks with its portfolio recommendation to favor cyclicals, especially Industrials (XLI) and Materials (XLB).
Aviation
Air travel continues to return with a vengeance as many look to take a long due summer vacation or see family for the first time in more than a year. Another high mark was set on Sunday despite a renewed threat from rising coronavirus case numbers fueled by the Delta variant. More than 2.2M people went though airport checkpoints nationwide, according to the Transportation Security Administration, notching the highest number since Feb. 28, 2020.
Thought bubble: Not only does the U.S. have a strong vaccination rate (it just reached 70% of all adults), but the country also has a strong domestic market. Contrast that to nations that rely more on international travel, or require digital health passes or negative PCR tests to board a plane. For the broader market, airline industry executives are relying on the easing of travel restrictions for things to snap back and some say consolidation may be in the cards post-pandemic as carriers look to shore up their balance sheets.
Meanwhile, the resurgence of travel, coupled with bad weather, has led to delays and flight cancellations. Airlines are struggling to rebuild networks and have been caught short-staffed after urging employees to take buyouts or leaves of absence to cut labor costs during the pandemic (they still received $54B in taxpayer money). Sen. Maria Cantwell (D-Wash), chair of the Senate Commerce Committee, is even questioning airlines to explain the high numbers of flight delays and cancellations.
Case in point: American Airlines (AAL) scrapped hundreds of flights on Monday following disruptions caused by severe thunderstorms that swept through its Dallas/Fort Worth International hub. Florida-based discount carrier Spirit Airlines (SAVE) additionally canceled about one-third of its flights and is "working around the clock to get back on track." At least 40% of Southwest (NYSE:LUV) and Spirit flights were also delayed on Sunday, which created long lines at ticket counters at Orlando International Airport.
Thought bubble: Not only does the U.S. have a strong vaccination rate (it just reached 70% of all adults), but the country also has a strong domestic market. Contrast that to nations that rely more on international travel, or require digital health passes or negative PCR tests to board a plane. For the broader market, airline industry executives are relying on the easing of travel restrictions for things to snap back and some say consolidation may be in the cards post-pandemic as carriers look to shore up their balance sheets.
Meanwhile, the resurgence of travel, coupled with bad weather, has led to delays and flight cancellations. Airlines are struggling to rebuild networks and have been caught short-staffed after urging employees to take buyouts or leaves of absence to cut labor costs during the pandemic (they still received $54B in taxpayer money). Sen. Maria Cantwell (D-Wash), chair of the Senate Commerce Committee, is even questioning airlines to explain the high numbers of flight delays and cancellations.
Case in point: American Airlines (AAL) scrapped hundreds of flights on Monday following disruptions caused by severe thunderstorms that swept through its Dallas/Fort Worth International hub. Florida-based discount carrier Spirit Airlines (SAVE) additionally canceled about one-third of its flights and is "working around the clock to get back on track." At least 40% of Southwest (NYSE:LUV) and Spirit flights were also delayed on Sunday, which created long lines at ticket counters at Orlando International Airport.
Legislation
Senators were back on Capitol Hill on Sunday as a bipartisan group of lawmakers put the finishing touches on a $1T infrastructure package. Touting the long-term economic benefits of the bill, key Democratic Senator Joe Manchin said the 2,702-page measure was likely to pass before the end of the week and would "keep us going for five to 10 years." The plan is one of President Biden's top legislative priorities and would be the largest investment in U.S. roads, bridges, ports and transit in decades.
What's in it? The Infrastructure Investment and Jobs Act includes $550B in new spending over five years, on top of $450B in previously approved funds. $110B would be allocated for roads and bridges, $66B for rail, $55B for water and wastewater infrastructure and $39B for public transit. There's also money for ports, high-speed broadband internet, replacing lead water pipes and building a network of electric vehicle charging stations.
Senators have clashed over how to pay for the package after ideas like raising revenue from a new gas tax were rejected. Current thought is to finance some of the bill through $205B in untapped COVID-19 relief aid, as well as unemployment assistance that was turned back by some states, but those sources might not pass muster with deficit hawks. The Senate could also impose changes that potentially complicate its chances of becoming law, like paying for the bill via tax hikes on corporations and wealthy Americans earning more than $400K per year.
Outlook: GOP Senator Susan Collins believes that at least 10 Republican senators will support the measure, enabling it to clear a 60-vote procedural hurdle. However, the bill would still need to get through the House of Representatives, where some Democratic progressives have suggested that the $1T price tag is inadequate. Democrats also aim to pass the bill alongside a second multi-trillion dollar package on "human infrastructure," though Biden has confirmed that the "physical infrastructure" proposal would not be dependent on that initiative.
What's in it? The Infrastructure Investment and Jobs Act includes $550B in new spending over five years, on top of $450B in previously approved funds. $110B would be allocated for roads and bridges, $66B for rail, $55B for water and wastewater infrastructure and $39B for public transit. There's also money for ports, high-speed broadband internet, replacing lead water pipes and building a network of electric vehicle charging stations.
Senators have clashed over how to pay for the package after ideas like raising revenue from a new gas tax were rejected. Current thought is to finance some of the bill through $205B in untapped COVID-19 relief aid, as well as unemployment assistance that was turned back by some states, but those sources might not pass muster with deficit hawks. The Senate could also impose changes that potentially complicate its chances of becoming law, like paying for the bill via tax hikes on corporations and wealthy Americans earning more than $400K per year.
Outlook: GOP Senator Susan Collins believes that at least 10 Republican senators will support the measure, enabling it to clear a 60-vote procedural hurdle. However, the bill would still need to get through the House of Representatives, where some Democratic progressives have suggested that the $1T price tag is inadequate. Democrats also aim to pass the bill alongside a second multi-trillion dollar package on "human infrastructure," though Biden has confirmed that the "physical infrastructure" proposal would not be dependent on that initiative.
U.S. Indices
Dow +0.8% to 35,209. S&P 500 +0.9% to 4,437. Nasdaq +1.1% to 14,836. Russell 2000 +0.9% to 2,246. CBOE Volatility Index -11.5% to 16.15.
S&P 500 Sectors
Consumer Staples -0.6%. Utilities +2.3%. Financials +3.6%. Telecom +0.8%. Healthcare +0.7%. Industrials +0.2%. Information Technology +0.9%. Materials +0.2%. Energy +0.3%. Consumer Discretionary +0.4%.
World Indices
London +1.3% to 7,123. France +3.1% to 6,817. Germany +1.4% to 15,761. Japan +2.% to 27,820. China +1.8% to 3,458. Hong Kong +0.8% to 26,179. India +3.2% to 54,278.
Commodities and Bonds
Crude Oil WTI -8.2% to $67.89/bbl. Gold -3.% to $1,763.5/oz. Natural Gas +5.7% to 4.135. Ten-Year Treasury Yield -0.4% to 133.95.
Forex and Cryptos
EUR/USD -0.92%. USD/JPY +0.49%. GBP/USD -0.22%. Bitcoin +4.3%. Litecoin +6.1%. Ethereum +15.6%. Ripple +2.1%.
Top Stock Gainers
BeyondSpring (NASDAQ:BYSI) +182%. Score Media and Gaming (NASDAQ:SCR) +113%. Bit Digital (NASDAQ:BTBT) +95%. AeroCentury Corp. (NYSE:ACY) +83%. Kaixin Auto Holdings (NASDAQ:KXIN) +66%.
Top Stock Losers
E-Home Household Service Holdings (NASDAQ:EJH) -81%. Zymergen (NASDAQ:ZY) -65%. Live Ventures (NASDAQ:LIVE) -52%. Moxian (NASDAQ:MOXC) -50%. Sprague Resources (NYSE:SRLP) -48%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.
Dow +0.8% to 35,209. S&P 500 +0.9% to 4,437. Nasdaq +1.1% to 14,836. Russell 2000 +0.9% to 2,246. CBOE Volatility Index -11.5% to 16.15.
S&P 500 Sectors
Consumer Staples -0.6%. Utilities +2.3%. Financials +3.6%. Telecom +0.8%. Healthcare +0.7%. Industrials +0.2%. Information Technology +0.9%. Materials +0.2%. Energy +0.3%. Consumer Discretionary +0.4%.
World Indices
London +1.3% to 7,123. France +3.1% to 6,817. Germany +1.4% to 15,761. Japan +2.% to 27,820. China +1.8% to 3,458. Hong Kong +0.8% to 26,179. India +3.2% to 54,278.
Commodities and Bonds
Crude Oil WTI -8.2% to $67.89/bbl. Gold -3.% to $1,763.5/oz. Natural Gas +5.7% to 4.135. Ten-Year Treasury Yield -0.4% to 133.95.
Forex and Cryptos
EUR/USD -0.92%. USD/JPY +0.49%. GBP/USD -0.22%. Bitcoin +4.3%. Litecoin +6.1%. Ethereum +15.6%. Ripple +2.1%.
Top Stock Gainers
BeyondSpring (NASDAQ:BYSI) +182%. Score Media and Gaming (NASDAQ:SCR) +113%. Bit Digital (NASDAQ:BTBT) +95%. AeroCentury Corp. (NYSE:ACY) +83%. Kaixin Auto Holdings (NASDAQ:KXIN) +66%.
Top Stock Losers
E-Home Household Service Holdings (NASDAQ:EJH) -81%. Zymergen (NASDAQ:ZY) -65%. Live Ventures (NASDAQ:LIVE) -52%. Moxian (NASDAQ:MOXC) -50%. Sprague Resources (NYSE:SRLP) -48%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.


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