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Monday Market Momentum – Up the Down Escalator

gif elevator sisyphus blake noel grawlixer •Still going up – kind of.

Sure we posted a record high on Friday, with the S&P closing at 3,943.34 but we hit 3,950.43 on Feb 16th (right after the holiday, when it was super-slow) but we were also hitting the 3,930s the week before and the week after so, unless we are going to sustain this level for a couple of weeks – this could be the double top to the rally we've been waiting for.  Biden is coming on TV at 1:45 to discuss all the exciting ways we can spend $1.9Tn but that gift has been given – "What have you done for us lately?" is the question the markets will ultimately be asking.

There's a Fed meeting this week and we're very unlikely to get "good" news out of that as the Fed is already doing all they can and more to keep the money flowing.  They've already said they'll do that essentially forever but yesterday I scraped my leg while bike riding and WHERE WAS MOM?  She said she'd "always" fix my boo-boos but she didn't – just another broken promise by the power-brokers!  

I don't love Mom any less for enjoying her retirement but how are we going to feel about Jerry Powell when he tells us to grow up and fix our own boo-boos?  Trump completely freaked out when Powell said he wasn't going to do more for the economy and that was what seemed a lifetime ago (remember when Donald Trump was our President – or was that just a bad dream?). 

Not even the most dedicated dead-heads will be chanting "Jerry" when Powell turns off the spigots but the real focus this week will be on the Fed's Economic Forecasts, which Bloomberg leading Economorons predict will show 5.8% GDP Growth this year.  That is possible as we DECREASED by 2.3% in 2020 so up 5.8% is net 3.5% growth since 2019 or, essentially, back to our normal(ish) around 2% annual growth – and it only cost us $9Tn (50% of our GDP) to do it!  

Unemployment is projected to persist around the 5% mark and inflation is projected to be contained unless, of course, you bought a tank of gas this weekend for $75 – then maybe you are thinking these economic forecasts are simply BS that have little or no link to reality.

Powell has said the economy isn’t close to achieving the necessary progress to trigger a shift in bond buying and that he will signal any tapering well in advance. That isn’t seen happening until 2022 in the view of a narrow majority of economists.  Most of the surveyed economists also don’t expect any near-term change, such as a shift to buying long-term Treasuries.  The Fed is certainly concerned about the yield-curve but, so far, they are determined to convince us it's a short-term problem.  The way they did in 2007 – that was so helpful, wasn't it?

Other than the Fed, there's not a lot of data this week, even though it's a Quad-Witching Friday as we wrap up the quarter (from a market perspective) and our oil shorts should be paying off this week as we're done with the catalysts (see Thursday's Report).  

There are still quite a lot of companies reporting earnings too:

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  1. Good Morning.


  2. Seeing no one checks the site over the week end I post my last comments once more for you.

    yodi
    March 12th, 2021 at 3:59 pm | Permalink | Tweet thisIgnore this user
    I have to defend my .30 cents on F. I my case I hold 300 stock and sold as well 3 x the Jun. 10 call. If I roll now I pay some one .30 cents extra. Obviously I can not sell additional Sep. 21 15 calls as they would be naked. At any time the price of the Jun 10 caller goes up, the Sep.21 15 caller will go up in proportion. So I do not see any reason rolling before the time the premium of the Jun 10 caller is reduced near zero. In case of Deveo he holds 5 long leap calls, by selling now 4 short calls will bring the balance some what out of proportion, being at least 1 call naked, as said by Phil one needs extra stock or long calls to cover, if the Sept 21 15 caller will be ITM.

    yodi
    March 12th, 2021 at 4:07 pm | Permalink | Tweet thisIgnore this user
    P.S. Deveo has a BCS to cover in case of only a poor Man's long 5 off only he would be covered by selling up to 5 short calls.

    yodi
    March 13th, 2021 at 5:15 am | Permalink | Tweet thisIgnore this user
    Here the lonely ranger again, glade we had some more members showing up Friday on site. Especially for any new comers, not having their 10,000 hours of trading, only with questions we all can learn. So always ask questions.

    New armchair trade REYN paying a div. just over 3% with a P.E. of 17 and having a trading range during the year from 21 to 36, so still some room to go up. 

    Buy stock @ 29.95 and sell the Dec 21 30/25 strangle for 4.55. Combined monthly return 1.9%

    Here I am not looking for leap BCS or PMT as they have not really leap options. Further always to remember BCS or PMT are more interesting with stocks having small or no div payments. You will find premiums are always higher. 

    Have a nice week end 


  3. Good morning!

    F/Yodi – My issue is I think that now is a good time to sell calls so, by NOT selling calls because you have existing short calls, you are possibly missing an opportunity to collect more premium later.  If you can layer the sales – all the better but, if I have to choose one or the other – I'll take the one where I can sell the larger amount of premium (and give myself more protection) while the stock is high in its channel (and the VIX is high).

    • AMC Entertainment (NYSE:AMC) is 11.7% higher on its plans to reopen nearly all of its California locations this week, starting with two flagship locations in Los Angeles today.
    • AMC's Burbank 16 and Century City 15 will reopen this afternoon.
    • Meanwhile, the remaining 23 movie theaters in Los Angeles County will be back in action on Friday, March 19. And the company plans to open nearly all 56 California locations Friday so long as local approvals are in place.
    • "To put the magnitude of Los Angeles reopening in perspective, as a movie market, the L.A. DMA is about double the size of the New York City market, which just finished last weekend as the No. 1 DMA in our circuit for box office," says AMC CEO Adam Aron.
    • Meanwhile, AMC's various rallies and equity raises have resulted in China's Dalian Wanda Group losing majority control, though it continues to be its largest shareholder.
    • As of October, Wanda held 37.7% of AMC and 64.5% of its voting power, but AMC notes Wanda has now shrunk its stake and voting power to 9.8%.
    • AMC also indicated in its earnings this week that it had come to an acceptable deal with Warner Bros. in order to keep exhibiting those films even as they appear simultaneously on HBO Max.

    I have to say – I saw the preview for King Kong vs. Godzilla and there's no way I'm not seeing that in IMAX!

    • Moderna (MRNA +0.8%) announces that the first participants have been dosed in the Phase 1 study of mRNA-1283, the company’s next generation COVID-19 vaccine candidate, developed as a potential refrigerator stable mRNA vaccine that will facilitate easier distribution and administration by healthcare providers.
    • This Phase 1 dose-ranging study will assess the safety and immunogenicity of mRNA-1283 against COVID-19.
    • The study will evaluate three dose levels, 10 µg, 30 µg, and 100 µg, of the mRNA-1283 vaccine candidate given to healthy adults as a 2-dose series, 28 days apart, and one dose level, 100 µg, of mRNA-1283 given to healthy adults in a single dose.
    • The results from the doses will be compared with a 2-dose series of 100 µg of mRNA-1273, the currently authorized dose level.
    • mRNA-1283 is intended to be evaluated in futures studies for use as a booster dose for previously vaccinated or seropositive as well as in a primary series for seronegative individuals, Moderna said.
    • Moderna had announced that the first participants had been dosed with the company’s modified COVID-19 vaccines, designed to address the potential need for booster vaccine candidates, in an amendment to the ongoing Phase 2 clinical study, earlier this month.
    • The Transportation Security Administration: TSA said air travel has hit its highest level in nearly a year.
    • Lisa Farbstein a public affairs spokesperson for the TSA stated on Twitter “officers screened 1,357,111 people at airport security checkpoints, Friday, March 12. The last time checkpoint throughput was that high was March 15, 2020.”
    • The U.S. Global Jets ETF (NYSEARCA:JETS) which tracks several airline-related organizations has seen strong inflows of funds and a rising level in NAV over the past six months.
    • JETS currently has over $4b assets under management and a NAV of 28.23. The NAV for JETS has been growing month over month. See below chart.

    • JETS is the only true air travel-based exchange traded fund but it has been outperforming the likes of other transportation ETFs and the S&P 500. JETS is currently +54.38%+17.49%+7.66% and +23.68% on a 6M, 1M, 5D and YTD basis respectively. JETS also closed Friday at +2.67% and is +3.00% in early trading today.
    • See below a 6M chart of JETS and its performance against the S&P 500 as well as two competing transportation exchange traded funds SPDR S&P Transportation ETF (NYSEARCA:XTN) and the iShares Transportation Average ETF (BATS:IYT).

    • JETS largest holding “10.92%” is in Southwest Airlines which shares have opened in early trading +2.47%. The rise in share price has to do with Southwest indicating that March's operating revenue is better than expected.
    • In a statement by Southwest Airlines “The company has continued to experience an improvement in leisure passenger bookings with beach and other nature-inspired destinations continuing to outperform other regions,” Southwest said in a statement per Reuters
    • Southwest Airlines is +18.87% on a 1M basis and 30.94% YTD. The strong performance of late in JETS number one holding is a positive outlook for the ETF.
    • See more information on Southwest Airlines improved forecast.
    • The Dow (DJI) +0.4% is higher thanks to another price boost from Boeing, but the S&P (SP500) +0.1% is little changed and the Nasdaq (COMP) is bouncing between positive and negative territory.
    • The 10-year Treasury yield is off 2 basis points to 1.62%, but still around one-year highs.
    • The Empire State Manufacturing index topped expectations for March, coming in at 17.4.
    • "Another US data beat consistent with my view that analysts are yet to fully internalize the surge in growth," Mohamed El-Erian, adviser to Allianz, tweets.
    • Investors will be looking ahead to Wednesday's FOMC decision and Chairman Jerome Powell's press conference.
    • "The FOMC is not yet 100% convinced that Covid or its variants are finished limiting activity," TS Lombard economist Steven Blitz writes. "Further, employment remains far from the Fed’s goals by virtue of what parts of the economy remain impaired. Nevertheless, the Fed is sitting atop a dynamic process moving in the right direction with real GDP about to cross 2019:Q4 levels yet the structure of interest rates is far below any level normally associated with such activity."
    • Seven of the 11 S&P sectors are higher, but with a tilt toward the defensives. Utilities (NYSEARCA:XLU) is the best-performing sectors. Energy (NYSEARCA:XLE) is bringing up the rear.
    • The megacaps are mostly lower, with Facebook and Apple the only names in the green.
    • Gaming stocks are active, with March Madness expecting to bring in $1B in legal wagering.
    • Direct stimulus checks are arriving in the U.S. as part of the latest $1.9T stimulus and COVID relief package.
    • Since COVID was declared a pandemic and global lockdowns started, U.S. "fiscal policy has eased sharply via a succession of large discretionary packages with the American Rescue Plan Act taking the total of the Phase 1-5 packages to over $5 trillion," Goldman Sachs says. "In Europe, we expect disbursement of roughly $900 billion Next Generation EU funds to member states to start in Q2, and the UK recently announced an expansionary budget roughly equivalent to $90 billion."
    • The U.S. seems, on the surface, to be much more aggressive in providing fiscal support than other advanced economies. But Goldman economists Jan Hatzius and Sid Bhushan argue that standard budgetary measures don't provide a clear answer as they "understate the important role of existing programs and automatic stabilizers in economies with sizable social welfare systems, such as Europe."
    • Their alternative is to look at the change in the overall budget deficit relative to the change in the out put gap, scaled by GDP and compared with the pre-pandemic level.
    • It is "clear that the US is not alone in providing large amounts of fiscal support, as Canada, Japan, and Australia look broadly similar and the UK is not that far behind."
    • "That support should help generate a strong economic recovery in the near term, although it could also result in a more negative fiscal impulse in subsequent years (assuming deficits will need to normalize eventually). The EU is not as far behind the US as other measures such as the cyclically adjusted deficit or a tally of discretionary packages would suggest. Nevertheless, the level of support does look lower, especially in Spain. Along with the slower vaccination start, this could weigh on the early part of the European recovery."
    • Stock index futures are mixed ahead of the open as inflation concerns linger. The S&P (SPX) (NYSEARCA:SPY), and Nasdaq (NDX:IND) (NASDAQ:QQQ) futures are down slightly, with Dow (INDU) (NYSEARCA:DIA) futures edging up.
    • A year after the WHO declared a pandemic major market indicators are mostly higher than they were in March 2020.


  4. AMC/Phil – of course they're opening; it's movie awards season and LA County is now well into tier 2 for epidemic restrictions (we were in tier 1, the most restrictive, for many months) so between easing and the awards the theaters figure on making a bundle – unless and until the disease starts climbing again. Mike Osterholm is excited about another wave, and I know Mike from when I was at U Minn myself, he's an excitable fellow – but he's also a good epidemiologist. We shall see.


  5. Snow / 2nd wave-

    "excited about another wave"- does he think its going to be driven by the new variants?  Everyone going back to 'normal' too soon?  Thx!


  6. Snow/Mike – Re US COVID-19 #s: While we may get a smaller additional spikes in COVID-19 case numbers due to reopening (in late March/April), these should be blunted by 1) improving weather and more outdoor activity and 2) growing background immunity due to vaccinations and people who have had the disease already (and thus carry protective antibodies for at least a period of months). I believe that these smaller spikes in various areas of the country will follow a rapid downword trend, with nearly imperceptible viral case #s by Memorial day. Although we may not have true "heard" immunity by then, the # of people who have some element of protective immunity by June will be high enough that rapid soceital transmission in the USA should all but cease. Also, given that elderly/infirm will be completely vaccinated by then, the cases we do have should be largely mild disease with very low levels of hospitalization and death. 


  7. June 60-70 XOM Call spread @ $3, and selling June $55 Puts @ $2.5. Net 0.5 for the $10 spread, with worst case owning XOM at net $55.50 in June (or could roll if needed). Essentially, a play on on continuation of XOM uptrend and "surprise" oil/gas/travel demand heading into the summer driving season. 


  8. Emailmike & Rick/next wave – yes, Osterholm thinks the new variants will be able to get around the immunity provided by the vaccines enough that we'll have a spike in cases come April & May.


  9. Newbie question for you here:

    I had the following position Sold 2 Jan 22 VIAC $15 Calls, Bought 2 Jan 22 VIAC $8 Calls, Sold 2 Jan 22 $20 calls. Friday I was assigned the short $15 Calls. It seems odd to me considering there’s 300 days left. Now they’re showing as a -200 shares of stock in TOS. Do I need to close that position by buying them? My Long $8 Calls are still open. Any thoughts on what I should do here?


  10. Snow & Rick- thanks for the info!


  11. swamp

    You're technically short the 200 shares but you are covered by your longs.  The position is deep in the money so you really have little to worry about.  You can close the position by having your brokerage execute your longs.  That is probably the most sensible move.   There is little benefit in holding on to the long calls at this point since you should have a delta at or near 1 --making it functionally stock anyway.


  12. swampfox The buyer of your short option can call on you any time for the stock. Especially if there is no premium left. It is advisable to buy back the short 200 stock, as you have borrowed the same from the broker. If you wait to long and the stock goes further up you pay even more to buy it back. 


  13. as JPH1121 says you can close you 8 longs to compensate for the stock purchase, or roll up the longs and sell further short calls against the long calls.


  14. Phil / Anyone: Is Optrader gone? Last time I was a member he had an active chat room on here, and was a great swing trader. Learned a ton from him. Just curious what happened to him!






  15. Italy Heads Into Another Lockdown


  16. Any one followed my AKAM trade of Friday up 2$ today!!!


  17. looks like AMGN is on its way up again. Stock pays 3% and has a p.e. of 19. 


  18. One more point on option assignment. Always check you short options in respect of premium left. No matter how far out the option is. As long there is still premium left you can expect not to be assigned. However if you say left with a premium of .20 and the stock pays a div of .25 cents ALL you premium is burned up and you can expect the buyer of the option to call on you to deliver. Even that he will pay you .20 cents of premium he is looking for the 5 cent extra on div. 


  19. All-Just a personal observation on covid situation. I had blood test to verify antibodies after spouse and son got the covid late fall and I didn't. Son just came back from TCI after a month trying to get things sold off at his restaurant etc. Within 5 days I was down and out even though son had stayed at the lakehouse not with me. It hit hard and fast and most definately was some kind of flu. Fever, excruciating joint pain, vomiting , no appetite, extreme fatigue, hard to breathe, difficult to stay upright. Just saying don't for one minute think we are anywhere near finished with this and anyone who does not take this seriously is betting with their lives.NOte I have no underlying conditions, take no medications,and am in top 5% in physical fitness. Age is the only variable. My guess is the English variant since TCI is English held and not many restrictions, but truly don't know and no way to find out.

    s


  20. Happy to see you're better, Pirate!


  21. pirateinvestor Thanks for the update you can not publish this often enough. 


  22. Yodi / AKAM – nice trade. didn't enter it yet. will take a look today! Will also take a look at AMGN

    Pirate / COVID – great to hear you're doing better! Yes, COVID-19 sucks. I'm an emergency radiologist and healthcare administrator – can't even begin to describe the stuff we've seen in our (7 hospital) healthcare system the last year. Just terrible. 

    I couldn't help myself and bought some 3/19 GME $150 puts this morning as a swing trade. Will see. This stock is too crazy. 


  23. Let's hope so Rick! 

    XOM/Rick – Oil hasn't been over $60 very much since 2015 – I don't see why ending the virus will put us back to higher levels.  I think the traders are way ahead of themselves on this one.

    VIAC/Swamp – Those are so deep in the money I guess the caller wanted the dividend, which paid out on Friday.  So he took your stock and stole the dividend, putting $15 cash in your account and leaving you short 200 shares.  They are up $2 today so you can exercise your $8 calls to balance out the stock so you'll take $8 of that $15 they paid you and someone else will be left holding the short stock.

    Remember when people would ask me why I kept recommending them, even though the stock was going lower?

    And what JPH said.

    Optrader/Rick – He's been gone for a few years now.  Lost track of him since.

    AKAM/Yodi – Very nice.

    Serious/Pirate – Damned right.  I have no desire to be the one out of 100,000 outlier – especially so close to the end of the cycle (hopefully).

    My Niece got it twice now as she's a school guidance counselor – about the worst thing to be in a school with all the kids she sees every day. 

    GME/Rick – Fun day today.


  24. GOLD having a decent day, but NEM having a great day. KL trailing, as usual it appears. KL is frustrating. (i have positions in all 3)


  25. Phil / BABA – on Friday you indicated to roll down from the Jan 250 longs to t he 200 longs?   are you selling any puts on these?


  26. Batman

    Re: BABA

    Phil noted on Friday A bit lower and we'll roll the $250s to the $200s !


  27. Gold/Rick – Gold took a nice bounce last week and the miners are just starting to catch up.

    BABA/Batman – We already sold 5 2023 $200 puts for $31, now $34 so not looking to add more risk on that end.  Long-term, happy to own them down there but, as part of this spread, we're in for net $13,000 and the 2023 $250s are now $45 and the $200s are $67.50 so $22.50 to roll 15 is $33,750 so we'd then be in 15 2023 $200/300 bull call spreads with 5 short $200 puts at net $43,750 on the $150,000 spread that's $42,000 in the money at the moment so all good – though we haven't officially done the roll yet.  Either BABA gets cheaper and we spend less to make the roll or it gets more expensive and we don't need to do the roll at all – so no point in rushing it when there's no downside to waiting.


  28. Thanks for the good thoughts. I've talked with more people who say relatives had covid but test NEGATIVE for the antibodies? Getting it twice? Stay vigilant, stay safe. At least back to half alive now.


  29. Pirate – yes, it is known that people who have had COVID-19 (test confirmed) can subsequently test negative for the antibodies. There is considerable variation in antibody tests available on the market, making true analysis of the medical literature difficult. But, we certainly have seen enough of this to know it is "real". What does this mean? We're not sure. There appears to be a period of immunity post-infection, but its no where near as consistent or as protective as following vaccine. These people's immune systems have been "primed" to some degree against COVID (hence when these "recovered" patients get the first dose of vaccine they sometimes show reactions similar to others who have had second doses – and there is a theory that these people may have a milder second case should they be re-exposed vs. if they had never had it before). Certainly complex from an epidemiological and person-level situation. 


  30. Markets popping into the close.  

    As to those antibody tests – the majority of them are unreliable so hard to say what's real.  We're all in the middle of an ongoing study which we didn't realize we volunteered for….

    • ConocoPhillips (COP -2.1%), EOG Resources (EOG -0.7%), Cimarex Energy (XEC +0.7%) and Continental Resources (CLR -1.9%) are all downgraded at Bank of America, which says it is "high-grading" its energy stock picks amid crude oil's rise.
    • The four E&P names boast free cash yields that support greater return of cash to shareholders, but the value of unlevered free cash flow net of debt suggests upside is more limited vs. the broader sector, BofA analyst Doug Leggate says.
    • Occidental Petroleum (OXY -4.4%) remains BofA's top U.S. pick among a number of Buy rated oil-levered names, including top sector ideas Exxon Mobil (XOM -2.7%) for yield, Hess (HES -1.6%) and APA (APA +1.1%) for exploration plays, and Pioneer Natural Resources (PXD +0.0%) and Devon Energy (DVN +2.1%) for consolidation and portfolio high grading.
    • OXY shares trade sharply lower today after shareholder Carl Ichan discloses plans to cut his $3B stake by as much as a third while remaining on the company's board.
    Company Ticker Type February January December 3-month average
    Capital One COF delinquency 2.45% 2.49% 2.41% 2.45%
        charge-off 2.66% 2.54% 2.42% 2.54%
    American Express AXP delinquency 1.00% 1.00% 1.00% 1.00%
        charge-off 1.40% 1.30% 1.60% 1.43%
    JPMorgan JPM delinquency 0.97% 0.99% 0.99% 0.98%
        charge-off 2.11% 1.97% 1.70% 1.93%
    Synchrony SYF core delinquency 3.10% 3.20% 3.10% 3.13%
        adjusted charge-off 4.00% 3.10% 3.10% 3.40%
    Discover Financial DFS delinquency 2.01% 2.08% 2.07% 2.05%
        charge-off 3.15% 2.57% 2.45% 2.72%
    Alliance Data Systems ADS delinquency 4.30% 4.30% 4.40% 4.33%
        charge-off 5.20% 4.60% 8.70% 6.17%
    Citigroup C delinquency 1.31% 1.38% 1.36% 1.35%
        charge-off 2.76% 2.01% 2.11% 2.29%
    Bank of America BAC delinquency 1.50% 1.55% 1.50% 1.52%
        charge-off 2.67% 1.81% 1.67% 2.05%
        Avg. delinquency 2.08% 2.12% 2.10% 2.10%
        Avg. charge-off 2.99% 2.49% 2.97% 2.82%
    • On average, credit card delinquencies declined from January to February, but net charge-offs increased during that same period. For each company covered, charge-offs rose from the January level.
    • Bank of America CEO Brian Moynihan said consumer delinquencies have returned to below where they were before the COVID crisis. Some 2M customers suspended payments at the height of the crisis when unemployment stood at ~15%, but now that's "next to  nothing," he said in an interview on Bloomberg TV.  And those who have returned to work are paying their debts, he added.
    • Indications are that delinquencies won't rise in the near term as federal relief payments hit customer accounts.
    • The downside to the government's stimulus checks? Consumers will pay down their debt, so banks will collect less interest on the smaller balance. Wolfe Research analyst Bill Carcache, though, considers that effect will be transitory.
    • Overall, he sees lower credit losses more than offsetting lower net interest income from the smaller balances.
    • And while charge-offs were higher M/M, they're still on track outperform expectations, Carcache said in a note to clients.
    • Still, credit quality metrics may still be a bit muted as some banks are still offering forbearance programs for customers hurt by the pandemic. Generally, accounts under forbearance don't advance to the next stage of delinquency, and ultimately charge off, in the same timeframe that they would have if the account had not been subject to forbearance.
    • In 2020, American Airlines (AAL +7.3%) eliminated ~$17B of costs and reduced daily cash burn from $100M in April 2020 to $30M in 4Q20; raised $30B in liquidity.
    • The company flew larger schedule and more customers compared to peers; Q4 PRASM of (NASDAQ:AAL)(NASDAQ:UAL) and (NYSE:DAL) stood at 9.60, 7.85 and 7.38 respectively.
    • In the past three weeks, net bookings upticked, best since pandemic, currently 20% below 2019 levels, on rolling 7 days, will start to push some yield now.

    • American Airlines' The Green Flag Plan (2021) initiatives includes: double down on operational excellence and pursue efficiencies ($1.3B of permanent cost reductions in 2021).
    • Domestic Leisure coming back as vaccination increase, as well as short haul International recovering as hotels efforts to support testing requirements. Some green shoots Domestic Business but very small, competitive landscape for Long Haul International charging due to foreign carriers restructuring.
    • The company expects to end 1Q21 with $17B+ in total available liquidity (exclusive of $3B in payroll support through Sep 2021); future liquidity will be enhanced by pension relief and additional payroll support:

    • Alaska Air Group (ALK +5.8%reports expects Q1 capacity decline of ~33% Y/Y vs. prior expectation of ~30% after February capacity declined ~33% Y/Y.
    • February revenue passenger down 59% Y/Y and expects Q1 RPM to decline in the range of 55%-60% Y/Y unchanged from previously outlook.
    • Passenger load factor was 49%. Q1 passenger load factor to be ~45%-50%.
    • Cost per ASM excluding fuel and special items in Q1 to rise ~23%, vs. prior outlook of ~+20%.
    • Cash flow from operations to be $50M-$100M for the quarter vs. -$100M to $0.
    • In March 2020, the company entered into a 364-day Senior Secured Term Loan agreement which currently has an outstanding balance of $371M, and is due to mature in full on March 25, 2021. Expects to extend the maturity of this agreement into 2022.
    • Sector watch: American Airlines Group (AAL +7.2%), JetBlue (JBLU +5.7%), Hawaiian Holdings (HA +4.7%), Allegiant Travel (ALGT +5.2%), United Airlines (UAL +8.9%), Mesa Air (MESA +3.8%) and Delta Air Lines (DAL +3.0%)
    • Global shipments of wearable devices were up 27% on the year to 153.5M in Q4, according to IDC data.
    • Wearable shipments were up 28% to 444.7M in 2020.
    • Q4 growth was driven by new devices and lower prices around the holiday period. The full-year growth came as consumers in lockdown switched spending habits from leisure to consumer electronics.
    • Hearables led the categories of wearables, representing 64% of the market, followed by watches with a 24% share. Wristbands declined 18% during Q4 for a roughly 12% share.
    • Apple (NASDAQ:AAPL) led Q4 wearables with a 36% market share. Watch shipments were up 46%. Hearables were up 22%, a deceleration from the 28% and 29% gains in the prior two quarters.
    • Xiaomi came in second with a  9% market share and a 5% Y/Y growth.
    • Samsung (OTC:SSNNF,OTC:SSNLF) rounded out the top three with 13M shipments, an 8.5% market share, and 21% growth.
    • Related: Earlier today, noted Apple analyst Ming-Chi Kuo said Apple will likely release the next-gen AirPods 3 hearable in Q3.
    • The electric vehicle sector is higher after Volkswagen (OTCPK:VLKAF +6.0%) highlighted an even deeper commitment to electrification during its Battery Day event today.
    • Canoo (GOEV +7.6%), Lordstown Motors (RIDE +6.2%), QuantumScape (QS +7.3%), XL Fleet (XL +4.8%), Churchill Capital IV (CCIV +5.8%), Workhorse Group (WKHS +4.9%), Romeo Power (RMO +2.2%), GreenPower Motors (GP +6.4%) and Nikola (NKLA +1.6%) are all higher after Volkswagen said it aimed to cut the costs of producing its batteries by up to 50%, build more battery factories, expand its network of charging stations and eventually transition over to solid-state technology that could cut costs even further and boost efficiency.
    • Volkswagen Group Board Member for Technology Thomas Schmall said the goal was to drive down the cost of battery production below $100 per kWh, a level that some think will make EVs at price parity with gas-powered vehicles
    • The big announcements out of Volkswagen do not have Tesla (TSLA +1.4%) investors running for shelter as some analysts see room for enough both in the EV transformation of the industry.
    • Read more details on Volkswagen's Battery Day

    • Bloomberg data indicate that a record $162.4B (vs. $37B in first three months of 2020) has been raised by 600+ issuers in 2021, the highest-ever, with SPACs accounting for half of the proceeds.

    • Unprecedented monetary and fiscal stimulus, ultra-low interest rates and global markets at record levels pushed both traditional and SPAC listings.
    • With rising bond yields and pandemic-winner stocks loosing traction, an index that tracks SPAC listings slumped 17% from February high levels.
    • SPACs ETFs Watch: (NYSEARCA:SPAK) dropped 14% from Feb.16 until date while (NYSE:SPCX) was down 8% from Feb.8 levels until date.
    • "Volatility will weigh on the IPO market to the extent that investors may become more selective about the offerings they participate in, whereas when U.S. indexes and tech stocks are booming, there’s a tendency for investors to be less selective," James Palmer, the head of equity capital markets for Europe, the Middle East and Africa at Bank of America commented.
    • South Korean e-commerce giant Coupang (NYSE:CPNG), backed by SoftBank's Vision Fund (OTCPK:SFTBY), surged 80% when it opened for trade on Mar.11; it raised $4.6B, biggest U.S. listing since Uber Technologies.

    • Bumble (NASDAQ:BMBL) raised more than $2.15B in its IPO in February mid when it popped 80% in first day trade.
    • Among laggards, Oscar Health (NYSE:OSCR) dropped in 11% on its first session on Mar.3.
    • "Truly disruptive companies with a unique offering, particularly with a sustainable edge, are likely to find demand for their offering regardless of the wider market," Lewis Grant, a senior portfolio manager at the international business of Federated Hermes.
    • European markets are also experiencing a splurge of deals after two years of dull activity; in this week, food-delivery company Deliveroo, a lockdown winner, and Vodafone Group European mobile-phone mast unit Vantage Towers AG, an income play, lay out plans for billion-dollar listings in the region.
    • With SPACs, the U.S. SEC recently warned investors about buying SPACs endorsed by celebrities; "With changes at the SEC, SPACs in the U.S. may come under greater regulatory scrutiny," Jason Manketo, global co-head of the equities practice at law firm Linklaters commented.
    • In 2020, Nasdaq Economic Research indicated that after SPACs, healthcare sector accounted for almost one-third of all new capital raised by companies; consumer companies raised higher capital than any year since 2010:

    • Bloomberg data indicates that 75% SPACs included in this quarter's tally of listings have not announced an acquisition yet and will refund the offer proceeds if targets not achieved before deadlines.
    • Related SA Reads:
    1. SA Contributor Renaissance Capital IPO Research recently wrote, "U.S. IPO Weekly Recap: Coupang Completes Year's Largest IPO And Roblox Direct-Lists In A 7 IPO Week"
    2. SPACs are catching the attention of short sellers (Mar.14)
    • Read: Various SPACs listings here.
    • Oscar nominations don't have the most direct effect on movie stocks, but the key theme that can be drawn from the 2021 nominees this morning is the major move from streaming services in cinema's lost year.
    • Netflix (NFLX -1%) drew the most nominations of any distributor, with a company-record 35. That was led on a picture-by-picture basis by Netflix's Mank, which topped all films with 10 total nominations including best picture, best director, and best supporting actress.
    • Amazon Prime Video (AMZN -1%) had its own record 12 nominations, half of those from Sound of Metal (but along with nominations for One Night in Miami, Borat: Subsequent Moviefilm and Time).
    • Meanwhile, Disney Plus (DIS -0.6%) has its first nominations: Two for Mulan, and three for Soul, while animated feature The One and Only Ivan also got a visual effects nomination. Both Mulan and Soul had been intended for theatrical release before Disney, along with other studios, started pivoting on distribution plans toward streaming. And Apple TV Plus (AAPL +1.8%) got its first nominations: one for Wolfwalkers and one for Tom Hanks' Greyhound.
    • Of eight best picture nominees, half had no recorded domestic box office receipts. Of the four that did, Promising Young Woman (CMCSA +0.4%) was the top grosser – with just $5.4M.
    • Netflix's 35 nominations were up from its own record 24 nominations a year ago.
    • Behind Mank, six films earned six nominations and all of them included a Best Picture nomination: The Father, Judas and the Black Messiah, Minari, Nomadland, Sound of Metal and The Trial of the Chicago 7.
    • Among the stocks for traditional major and "mini-major" studios: Disney (DIS -0.6%), Universal (CMCSA +0.4%), Warner Bros. (NYSE:T), Sony (SNE +0.6%), Paramount (VIAC +2.7%VIACA +3.6%), Lions Gate (LGF.A +1.5%LGF.B +1.3%), Eros STX Global (ESGC +3%), MGM Holdings (OTC:MGMB).
    • A little past midway into Monday’s trading session and investors can see a rise in the cannabis sector.
    • Today’s top-performing exchange traded funds happen to be driven around the cannabis space. So far 7 of the 10-best performing ETFs are all cannabis-based. See below a breakdown of today's top-performing cannabis exchange traded funds.
    • Amplify Seymour Cannabis ETF (NYSEARCA:CNBS):+5.36%
    • Global X Cannabis ETF (NASDAQ:POTX):+5.09%
    • Advisorshares Pure Cannabis ETF (NYSEARCA:YOLO):+4.47%
    • Spinnaker ETF Series The Cannabis ETF (NYSEARCA:THCX):+4.30%
    • Alternative Harvest ETF (NYSEARCA:MJ):+3.78%
    • Cambria Cannabis ETF (BATS:TOKE):+3.64%
    • Advisorshares Pure US Cannabis ETF (NYSEARCA:MSOS):+3.34%
    • Additionally, see how these ETFs have faired against the S&P 500 YTD. See chart below.

    • As Treasury yields rise and new stimulus cash hits the U.S. economy, talk about inflation is increasing.
    • Ten-year breakeven inflation expectations are at 2.26, levels not seen since 2014.
    • In a note out today, UBS economists look at the 10 most compelling questions about inflation for the market.
    1. Is this time really different? "Yes. Pandemic price movements have been unusually large (core items that moved more than 2sdev comprise 50% of CPI in the US/Eurozone) and are historically difficult to model/predict."
    2. Will the vaccine create massive service price normalization effects? "Baskets of (largely) service prices and apparel are likely to add significantly to inflation this year but in the US we expect downward pressure in (largely) core goods prices to neutralize the move in the US but not Europe."
    3. Will the global surge in liquidity cause inflation? "No, there is near zero relationship historically between broad money and inflation at frequencies of 10 years or less."
    4. Is "excess demand" really a risk for inflation? "Even in the most optimistic fiscal multiplier scenario, the flatness of the Phillips curves would contain inflation to 2-1/4%."
    5. Are Phillips curves useful in predicting the post-pandemic inflation trajectory? "Phillips curves explain only 10-20% of the variance in inflation in the US/Europe historically, with other transient factors often dominating in the short run."
    6. Are inflation expectations becoming unanchored? "Despite a slight uptick in the most recent readings, surveys generally remain at very low levels compared to earlier periods when inflation was below central bank targets."
    7. How worried should we be about rising commodity prices and shipping costs? "The YTD curve shift in oil will add 50bp inflation over the next few months, on top of last year's base effects. The impact of the global container shortage (a tripling of shipping cost) on inflation is more uncertain: we show a range of scenarios with a -20 to +100bp outcome range."
    8. Breakeven vs. realized inflation: common or distinct drivers? "10y breakevens have far smaller volatility (2stdev=90bp) than realized inflation (210bp) as one would expect, but normalizing for the narrower range they are almost equally sensitive to oil (explains 40% of the variation) and more contemporaneously correlated."
    9. Is there a global inflation cycle and how central are the U.S. and China? "Although the pandemic has synchronized both the business cycle and policy we show that normally there is no common inflation cycle."
    10. Does a booming housing market create a risk of a surge in rents in the U.S.? "We show that if rent levels were to return to their pre-pandemic trend by December, inflation could reach the Fed's target as early as this year rather than 2023."
    • A number of hotel REITs gain after Blackstone and Starwood Capital Group agreed to acquire Extended Stay Americas (STAY +13.3%) in a $6B deal, even though most other publicly traded lodging name don't focus solely on the extended stay sector.
    • Among names on rise in midday trading (New York time): Chatham Lodging Trust (CLDT +3.1%), Apple Hospitality (APLE +4.6%), Host Hotels (HST +3.9%), and Pebblebrook Hotel Trust (PEB +3.0%).
    • Of course, the pace of COVID-19 vaccinations has also been helping hotel stocks as that boosts confidence in travel resuming.
    • In premarket trading, Extended Stay's stock had topped the merger agreement price of $19.50 per paired share, but in regular trading the stock hasn't risen above $19.44.
    • Evercore ISI analyst Richard Hightower said the merger price for STAY is valued roughly at 16x FY2020 adjusted EBITDA. "While the numbers still aren't comparable at the moment, a mid-teens multiple would appear to represent a pretty hefty discount to most of STAY's peers" such as Choice Hotels International (CHH +2.4%), Hilton Worldwide (HLT -0.3%) and Wyndham Hotels & Resorts (WH +2.1%).
    • That potential discount "suggests there's room to raise and/or for another bidder to emerge," Hightower wrote.
    • But Jefferies analyst David Katz sees little chance of competing bids emerging, since both Blackstone and Starwood hold equity stakes in STAY (Starwood holds ~9.4% of STAY's outstanding paired shares). "We consider the bid approximately fair," Katz said in a note.
    • HST, APLE, CLDT all fare better than the S&P after the STAY announces its agreement to be acquired:
    • SA contributor Daniel Jones believes the worst is over for Apple Hospitality.



  31. Comment content omitted because it is too long.


  32. The Chinese government wants Alibaba Group Holding Ltd.to sell some of its media assets, including the South China Morning Post, because of growing concerns about the technology giant’s influence over public opinion in the country, according to a person familiar with the matter.

     

     

     

     

    Beijing expressed misgivings about Alibaba’s media holdings during several meetings dating to last year, said the person, asking not to be identified because the discussions are private. Government officials are particularly upset about the company’s influence over social media in China and its role in an online scandal, involving one of its former executives.

     

     

    Jack Ma, Alibaba’s co-founder, has been at the center of a government crackdown that began last year, targeting the e-commerce giant and its finance affiliate Ant Group Co. The Wall Street Journal reported earlier that China’s government is asking Alibaba to shed media properties.

    https://www.bloomberg.com/news/articles/2021-03-15/china-asks-alibaba-to-sell-media-assets-amid-rising-clampdown?cmpid=BBD031521_MKT&utm_medium=email&utm_source=newsletter&utm_term=210315&utm_campaign=marketsasia&sref=6nxHgiEtBABA 

     

    China Presses Alibaba to Sell Media Assets, Including SCMP