Wall Street Breakfast: Vaccine Overdrive

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Vaccine overdrive

The U.S. will be able to vaccinate its entire adult population by the end of May, according to President Biden, bringing the target forward by two months. That's largely thanks to a deal his administration engineered between two of the country's biggest drugmakers. The U.S. government has agreed to provide Merck (MRK) with nearly $270M to help produce a vaccine from Johnson & Johnson (JNJ), which received FDA emergency use approval this past weekend.

Bigger picture: Merck is already one of the world's largest vaccine makers, but it has fallen behind in the race to develop a jab for COVID-19. It's instead going to be using the fresh federal funding to produce raw materials, scale up manufacturing capacity and complete the fill-and-finish process. The funding is in addition to Merck's continued investment in its global vaccines manufacturing network as part of its planned capital investments of more than $20B from 2020 through the end of 2024.

"This is the type of collaboration between companies we saw in World War II," Biden declared. "I want to thank Johnson & Johnson and Merck for stepping up and being good corporate citizens during this national crisis." The White House is also boosting the number of vaccine doses being sent to states each week from 14.5M-15.2M, up from 8.6M when Biden took office in January. He also called on states to give priority to teachers, school staff and child care workers.

What else is happening? The remarks came shortly after Texas became the largest state to end its mask mandate and authorized all businesses to reopen "100 percent." Texas was followed shortly thereafter by Mississippi, where Gov. Tate Reeves said he would end a statewide mask mandate effective Wednesday, adding "It is time!" On the other side of the fence, CDC Director Dr. Rochelle Walensky said she is "really worried about more states rolling back public health measures... At this level of cases, with variants spreading, we stand to completely lose the hard-earned ground we have gained." (223 comments)

Gensler grilling

The SEC has been operating under temporary leadership since the end of December, when Chairman Jay Clayton left the agency after 3.5 years in the role. Since taking office, President Biden has been looking to appoint Gary Gensler to lead Wall Street's chief regulator, prompting the latter to testify before the Senate Banking Committee on Tuesday. He was mainly grilled on tactics used by some online brokerages, given the recent GameStop (GME) trading frenzy and its fallout.

Who is Gary Gensler? He's a former Goldman Sachs partner and ex-chief of the Commodity Futures Trading Commission (under the Obama administration). Gensler also spent time at the U.S. Treasury in the 1990s and served as the CFO for Hillary Clinton's 2016 presidential campaign. On the academia front, he's a professor at MIT's Sloan School of Management, where he teaches classes on digital currencies and blockchain.

At the hearing, the SEC nominee pledged to analyze the rise of stock trading "gamification" and intervene if necessary. He'll also "look at market structure in the equity markets around payment for order flow when frankly just a couple - a handful - of financial firms are buying most of the retail flow in America." Gensler further indicated the agency could soon move to force companies to disclose more about their political spending, climate risks and board diversity.

On cryptos: "To the extent that somebody is offering an investment contract or security that's under the SEC's remit, and they have exchanges that operate there, then we have to make sure there's investor protection. If it's not that, and it's a commodity, as Bitcoin (BTC-USD) has been deemed to be, then it's either a question for Congress or it's possibly a question for the Commodity Futures Trading Commission." (6 comments)

Siphoning SPACs

After losing its position as Europe's leading financial capital, the British government is looking toward looser stock listing rules to attract tech firms and SPACs. A surge in blank check companies has short-circuited the traditional IPO process, prompting a need for change to support the U.K.'s financial services sector. New listing rules would also aim to diversify London's recently struggling stock market, which is skewed toward older areas like banking, energy and mining.

Backdrop: Just weeks after the Brexit transition period ended on Jan. 1, Amsterdam surpassed London as Europe's largest share trading center, which piled pressure on the city to improve its competitiveness. SPACs have meanwhile surged in popularity during the pandemic, reaching record highs last year and continuing at breakneck speed so far in 2021. In fact, in the first two months of the year, there have been $61B worth of SPAC IPOs globally, almost all listing in the U.S. ($83B worth of deals were recorded in 2020).

Proposals: Current U.K. rules require SPACs to suspend trading once a target is acquired - meaning investors are locked in even if they don't like the purchase - but new recommendations from the Financial Conduct Authority could lift that requirement. Other changes would make it easier for company founders to list shares without giving up control, including dual-class share structures or reducing the free float requirement. Dual-class share structures have seen the Nasdaq and New York Stock Exchange attract many hot tech IPOs that have served as magnets for new growth companies to list in the U.S.

More pressure from Beijing

One of the most powerful businessmen in the world is Jack Ma - the founder of e-commerce colossus Alibaba (NYSE:BABA) - but he's found himself at odds with the Chinese government. After he criticized Chinese-state owned banks last year, Beijing retaliated with an antitrust investigation into Alibaba and pulled the listing of Ant Group, set to be the world's biggest IPO, in which Alibaba owns a one-third stake.

The latest: The financial payments powerhouse, which is also China's largest holder of consumer credit information, has defied intense government pressure by only giving a small amount of financial data to the country's central bank, FT reports. Personal credit information is a so-called "public good," according to the PBOC, and should be kept by a publicly owned entity or government agency. The central bank has long wanted to create a pool of credit data to help state-owned banks gauge creditworthiness due to increasing consumer loan defaults.

Ant is China's largest holder of consumer credit data, while its Alipay app is the country's biggest payments platform. The company, along with retail behemoth Alibaba, has seen Jack Ma become China's richest person, though he lost the title this week as his business empire came under regulatory scrutiny.

Thought bubble: Ant will likely cave in because, after all, it is a Chinese company and must listen to the government to stay in business. But Ma's fight with the authorities is another example of the escalating tensions between the state and China's private sector as President Xi exerts tighter control over the economy. Another area to consider is consumer trust in Ant Group, with many clients complaining online that they will walk away if their credit info is reported to the government. (7 comments)

Microsoft Mesh

At its annual Ignite developers conference, which was a streamed event this year due to the pandemic, Microsoft (MSFT) joined other tech titans in setting the stage for a mixed reality future. Its new platform called Mesh will allow individuals in different physical locations to participate in a shared holographic experience. Users will initially be able to express themselves as avatars, but over time, Mesh will allow people to project their own image through holoportation.

Quote: "This has been the dream for mixed reality, the idea from the very beginning," said Microsoft Technical Fellow Alex Kipman. "You can actually feel like you're in the same place with someone sharing content or you can teleport from different mixed reality devices and be present with people even when you’re not physically together."

Powered by the Azure cloud platform, Mesh will soon offer developers a full suite of AI-powered tools for avatar creation. Those include session management, spatial rendering, and synchronization across multiple users and holoportation to build mixed reality solutions. The open Mesh standards will also allow developers to design across supported devices, which includes Microsoft's HoloLens 2 headset, a range of other VR headsets, smartphones, tablets and PCs.

Outlook: Microsoft has already announced two apps built on the platform - Mesh for HoloLens and a Mesh-enabled version of Altspace VR, which essentially allows for holographic work meetings with enterprise-grade security features. The company further hopes there will eventually be a robust portfolio of third-party Mesh apps and integrations within Microsoft products like Teams. It may also soon get a high-priced competitor from Apple (AAPL), which is reportedly working on a $3,000 mixed reality headset for release as early as next year.

What else is happening...

Number of Lyft (LYFT) riders hits highest weekly growth since pandemic.

CBOE files to list what could be the first U.S. Bitcoin ETF.

Biden backs former President Trump's stance on solar tariffs.

Instacart (ICART) valued at $39B following latest funding raise.

Facebook (FB) CFO says vaccine progress means ad growth headwinds.

Big day for Rocket Companies (RKT) after Reddit chatter, Jim Cramer plug.

Intel (INTC) must pay $2.2B in damages after patent trial loss.

Inflation expectations are key in a post-Phillips Curve World - Fed's Daly.

Tuesday's Key Earnings

Box (BOX) +0.8% AH following strong revenue guidance.
Hewlett Packard Enterprise (HPE) unchanged AH on profit beat, slight revenue dip.
Kohl's (KSS) +0.7% keeping bull case alive with earnings topper.
Nordstrom (JWN) -2.6% AH with sales down 20% in Q4.
Target (TGT) -6.8% accelerating spending on new store growth.

Today's Markets

In Asia, Japan +0.5%. Hong Kong +2.7%. China +2%. India +2.3%.
In Europe, at midday, London +1%. Paris +0.7%. Frankfurt +1%.
Futures at 6:20, Dow +0.7%. S&P +0.6%. Nasdaq +0.7%. Crude +1.8% to $60.84. Gold -0.6% at $1723.60. Bitcoin +6% to $51783.
Ten-year Treasury Yield +3 bps to 1.44%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
10:00 Fed's Harker: "Equitable Workforce Recovery"
10:30 EIA Petroleum Inventories
12:00 PM Fed's Bostic Speech
1:00 PM Fed's Evans Speech
2:00 PM Fed's Beige Book
6:05 PM Fed's Kaplan Speech

Companies reporting earnings today »

Comments

[Winnertakesall]

I think Shareholders should have first crack at the vaccine.... you want the vaccine you have to own 500 shares. That will get these share prices moving.

[Jen Yang]

@Winnertakesall basically give priority to the rich?

[User 43549446]

"Thirty-four cases of pregnant women experiencing spontaneous miscarriages or stillbirths after receiving a COVID-19 vaccine have been submitted to the Vaccine Adverse Event Reporting System (VAERS)." www.theepochtimes.com/...

[User 44279746]

@jack bee That statistic means absolutely nothing without a full context.

FYI, per the CDC in 2017, the rate of still births for non-Hispanic white women was 4.89 per 1,000 live births. This rate is similar to that for Asian or Pacific Islander women, who had a stillbirth rate of 4.29. The rate of stillbirth for non-Hispanic black women was 10.32, the rate for American Indian or Alaska Native women was 7.22 and the rate for Hispanic women was 5.22.

So it would be nice to have an analysis of how many pregnant women gave birth since receiving the vaccine, as well as an analysis of their race/ethnicity. Especially since 100M have already received the vaccine.

Miscarriages occur at a much greater rate than stillbirths, so again, this anecdotal information is worthless.

[Fero.]

@jack bee , I am sure some of the freshly vaccinated were involved in a traffic accident too. Must have been the vaccine that is at fault.

[Invader from Earth]

The dip in $TSLA stock price is creating a fantastic buying opportunity. Nothing expected from Tesla, but great news.... Texas and Germany Gigafactories are coming online. FSD will be deployed shortly. Power Walls and Solar Energy are at capacity and growing. Tesla Liability Insurance is being beta tested. RoboTaxi May replace POVs....

[JCCIII]

@Invader from Earth I take it you are long TSLA?

[Invader from Earth]

The WH plan to vaccinate all Americans by the end of May, could mean all Americans will get at least the first of two vaccination shots... Glad the end to this terrible pandemic may be close at hand...

[john boy]

@Invader from Earth
OH goody i can use my timeshares again and hug people

[User 44279746]

"The White House is also boosting the number of vaccine doses being sent to states each week from 14.5M-15.2M, up from 8.6M when Biden took office in January."

Uh, nice try WSB, but the WH isn't increasing anything. It's the companies that are producing the vaccine who are producing more. Thanks to the Trump administration, Operation Warp Speed, a government initiated private/public $10 billion US program to help provide support to companies in the development, manufacturing and distribution of 300 million doses of COVID-19 vaccine, with the aim of having initial doses ready by January 2021, allowed this to happen.

[john boy]

Here comes the next trillion dollar company Microsoft mr. softee is going hollographic is there much money in that wouldn.t that make Zoom obsolete

[john boy]

Mr Bidden is going to have to get a lot more people in more places to get the population vacinated by June big time 24/7

[SB Pirate]

@john boy 101st Airborn has set up shop in Orlando aiming for 3000/day initially

[SaaS-man]

@john boy The JNJ being single dose & not having the same logistical challenges (especially around temperature) that the Pfizer and Moderna vaccines have makes this goal significantly easier to accomplish

[john boy]

@SB Pirate
yea now were talking

[SB Pirate]

A White Swan? Will Powell reveal Operation Twist 3.0 tomorrow at his WSJ presser? See ZH article. Very interested to hear from some of the smart people here about how it could playout for US$, stocks, bonds. TIA

[VoiceofSanitySometimes]

@SB Pirate

Waaaayyyy too early for the Fed to start firing its weapons. SPY is still within shouting distance of the ATH. Around SPY $360 is a normal 10% profit taking correction like we had in Sept / Oct of last year.

I'm told by better chartists than myself that the next resistance is around SPY $376. We still have a way to go before we even get there.

I think Mr Market is throwing a little "don't hate the wealth" tantrum right now. Eliz Warren is tone-deaf to that message (which is why she went nowhere in the Dem primaries), but someone will make her hear it anyway.

[Phil Dumfee]

Standard dance. Following Bernanke's lead. Twist and shout.

[SB Pirate]

@VoiceofSanitySometimes The article implies they are having to rescue the bond market and drag the long end rates back down. As far as SPY goes I agree next support level is around $375ish but could be lower from the breakout level back in November around $355. Kind of finished in limbo today.

[VoiceofSanitySometimes]

Time for my next rant on the horrible incentives by our current tax and benefits systems.

Biden now appears to be leaning toward the version of the $1,400 checks where individuals are eligible for the full payment with income up to $75K, and then phase out completely above $80K. So the marginal "tax rate" on earning that extra $5K just increased by 28% ($1,400 over $5,000). The federal rate on someone with that income is 22%, so now the combined marginal federal "tax" rate is 50%. Plus that person will pay Soc Sec and Medicare -- another 8% if they are employed or twice that if they are self-employed. Plus that person could pay state taxes with marginal rates between 0% and 6% depending on the state. Plus that person pays sales tax on anything they buy with that extra money. If it is a single parent, that extra $5K also phases down their child tax credits. Etc.

Circumstances can vary depending on lots of things, but a good estimate of what the marginal "tax" rate would be on that extra $5,000 of income is 65-75%.

Why bother working harder and/or more hours to earn an extra $5,000 if you are only going to keep $1,200 of it?

While Eliz Warren and others are screaming about taxes on the rich, can we first fix the onerous real tax / benefit rates on the middle class?

[MRFORT23]

@VoiceofSanitySometimes Considering the amount of time we’ve spent debating this new deal you’d think they’d have time to figure out who actually need it. Some people have lost their jobs through no fault of their own and we should hep them especially if they live I a state with minimal unemployment benefits.

But if didn’t lose your job and you’re making the same money you were a year ago, why are we giving you money?

I won’t get anything because I make to much. On the one hand I’m fine with that, I did not lose my job during this. On the other hand we’re about to borrow another $2T and I’m not getting anything which pisses me off.

[VoiceofSanitySometimes]

@MRFORT23

Depends on whether your purpose for the stimulus is to help those in need or to re-stimulate the economy. If your purpose is to just help those adversely impacted by covid, then you should only give it to those whose income in 2020 was considerably lower than it was in 2019. That means seniors on soc sec don't get it (they weren't impacted), and nor do low income people whose income didn't change. But if someone made $200K in 2019 but only $100K in 2020, they should be eligible.

I'd rather see it used to drive the economy and push toward reopening. The best way to do that is to give it all to the people. $1.9T is probably more than is needed, but lets use that number. That's about $5,500 per person. Family of 4 gets $20K.

Now let all the businesses and states etc compete for their share of it. Instead of handouts to the states, make them have to fight to earn it by opening to tourism, etc. Instead of handouts to the airlines or hotels, make them have to fight to earn it. Nothing encourages innovation like competition, and with a massive pool of money to be had there will be serious competition and innovation. And that will create jobs.

[Puck]

@MRFORT23 "On the other hand we’re about to borrow another $2T"

Currency issuer do not need to borrow in order to spend.

Create a ledger entry, sure. But those bonds do not represent borrowing.

[investingInvestor]

Have you watched "Interstellar", a movie about Humanity's future as the Earth experiences climate change?

Today, I ran across this article about John Deere tractor AND imagined those farm tractors operating remotely, autonomously, the same future timeframe:

www.networkworld.com/...

5G enables our positive future outcomes. Precision agriculture. Smart vehicle to everything. Smart cities. Even precision medicine, with your iPhone calling your PCP with diagnostics.

Can you hear me now?
SA: I also read that AT&T plans to sell some / all its Government businesses. Still think AT&T C Level executives will serve AT&T stock holders? I think AT&T is an M&A target now.

[john boy]

@investingInvestor
Love that movie Mathew Mconaheeeeeey, if can have self driving cars and semi's then easy peasy for farm machinery obviously they never heard of fertalyzer exct crop barnes though

[Phil Dumfee]

Herd immunity by Memorial Day.

GDP growth at 10%

[normwho7]

What about some of us that prefer alternative ( natural) products. I have tremendous success with acupuncture, & Chinese herbs (among other things). Why do we never see this advertised on TV. or covered by health insurance.
Johnson & Johnson makes talcum powder that caused overian cancer. Yes mr. President thanks to all the pharmaceutical co. That came together to help us in this crises because they are such stand up Co.’s I’m sure $$$$$$ is not the underlying agenda. 
president if you want your grandchild can have my vaccine dosage.

[john boy]

@normwho7 anybody can advertise maybe because accupunctureis not yet mainstream start a school and sell franchises get rich

[User 52721580]

What is a SPAC? Too lazy to look it up.

[Humble Eagles]

>>The U.S. will be able to vaccinate its entire adult population by the end of May, according to President Biden, bringing the target forward by two months. That's largely thanks to a deal his administration engineered between two of the country's biggest drugmakers. <<

This statement is incorrect. The vaccines were contracted under OWS. JNJ had recently confirmed their ability to deliver 20MM shots by 3/31 and 100MM by 6/31 (a bit over 20MM per month avg). MRNA and PFE are set to deliver 220MM by 3/31, 400MM by 5/31, and 600MM by 7/31 (average a bit over 100MM per month moving forward). Bottom line is that these numbers were always sufficient to vaccinate all US adults by the end of May. Biden suppressed these facts by talking about his 100MM shot goal by early May and all of the darkest days talk. Now he's trying to steal credit for himself by telling people the goal will be met based on the MRK JNJ hookup. Unbelievable. The information about these contracts has been available since Biden set the incredibly ambitious goal of 100MM shots by early May. (They have already delivered over 100MM shots as of today, two months early, BTW).

[crujonesrad]

@Humble Eagles you ever heard the phrase under promise, over deliver? It's generally a good one to follow in business and politics.

[User 44279746]

@crujonesrad Liars make the best promises. Some promises are better left unsaid. When a man repeats a promise again and again, he means to fail you.

[Humble Eagles]

@crujonesrad I can tell you that if a CEO was consistently off by several hundred percent on critical planning and guidance he wouldn't last long. The problem with deceiving people like this is that the states don't know how to plan accurately. They needed to be ready to handle 3 million shots per day, yet the prez was telling them, and repeating when questioned, 1 million shots per day. Later he updated to 1.5 million per day. The disinformation campaign is confusing people badly. Of course, now he says that the 3 million shots are all because of him. Oh brother. BTW, we aren't even half way through the first 100 days and they have already delivered 100+ million shots. The deliveries are just starting to ramp good, too. Hopefully, the governors know not to listen to the Moe, Larry and Curly show in DC.

[User 43549446]

"They claim that Pfizer’s shot causes “mortality hundreds of times greater in young people compared to mortality from coronavirus without the vaccine, and dozens of times more in the elderly, when the documented mortality from coronavirus is in the vicinity of the vaccine dose, thus adding greater mortality from heart attack, stroke, etc.”" www.lewrockwell.com/...

[shortoptimism]

@jack bee That is an extremely unreliable source. And that is not how these numbers work.

[JAMES CARLINI]

@jack bee b
WAIT for the J&J vaccine. There ARE some side effects with the others. Why do we have to "gamble" and rush to get a vaccine? Side effects are being downplayed. Death is not something to downplay.
1044

[john boy]

@jack bee Where the hell did you heat that stuff, define a young person age under 30 they havent even been vaccinated yet

[Dom Bruno]

@riverthief for your reading pleasue...
Search Results from the VAERS Database
www.medalerts.org/...

[grharmon]

@Dom Bruno i hear Alex Jones has good supplements for ridiculously high prices

[VoiceofSanitySometimes]

DJIA futures were up 200+ this AM, then ADP throws cold water on everything and they are now red...

[SB Pirate]

@VoiceofSanitySometimes The surreal continues. So many gray swans.

[BWAHAHAHAHAHA]

@VoiceofSanitySometimes Just like the current administration is starting to do.

[blueline]

"The White House is also boosting the number of vaccine doses being sent to states each week"

No the White House is not boosting the number of vaccines. The pharmaceutical companies are increasing their production following their original plans.

We don't need a vaccine for every adult American because many Americans will opt out. That leaves millions of doses that will either be destroyed or possibly given away to other countries. Guess who will pay for all of those extra vaccines.

[VoiceofSanitySometimes]

@blueline

I've been saying there will be a glut of these vaccines by summer for over a month now. All you had to do was look at the numbers. Thankfully, Pfizer now says their vaccine doesn't need -80F storage, or the cost of keeping all those vaccines would have been outrageously high.

That said, Trump and now Biden had no choice but to buy far more than will be ultimately needed in the US. If they'd tried to trim the quantities ordered and come up even just a tiny % short, it would have been political suicide. The vaccines are relatively cheap -- $10 to $20 per shot (the bigger cost is in the distribution and paying the doctors to give the shots). If there are 200MM doses left over, that is only about $3B worth. Compared to the latest $1.9Trillion "stimulus" where only about 25% has anything to do with covid, that $3B is the least of our fiscal concerns.

There is plenty to gripe about politically, but the glut of vaccines shouldn't be high on that list.

[Jpokergman]

@blueline Rich people got scared big time.....

[SB Pirate]

@VoiceofSanitySometimes As too quantity, I have previously related from good sources that the CV vaccine will be an annual event hence forth since the vaccine is not a cure just like the flu shot. One benefit as my Dr. pointed out is that CV and the common cold have a lot in common and the mRNA based vaccines could help reduce the common cold. Now there's a selling point! Too bad the Pres. and VP. made a big issue of not trusting the vaccine during the elections. Apparently my sources tell me it had quite an effect on certain groups. At any rate now that the J&J vaccine is out I will start to plan on getting stuck.

[Dom Bruno]

Exactly, why inject yourself with unproven untested vaccines that have a horrible track record when your chances of getting fatally affected by the virus are less than 1%? There is also speculation that we won't see the true effects of these vaccines for 12-18 months...

[It is a Top]

@Dom Bruno
"Exactly, why inject yourself with unproven untested vaccines that have a horrible track record when your chances of getting fatally affected by the virus are less than 1%? "

Can't find anything that supports your claim that they have a horrible track record.

Your claims aren't true.

[VoiceofSanitySometimes]

@Dom Bruno

It is all about risk v reward. If you are over 65, and particularly if you have certain pre-existing conditions or are in an environment where you are more likely to be exposed to covid, the benefits of the vaccine are likely far greater than the risks.

If you are younger, healthier, and less likely to be exposed to the virus, then the vaccine trade-off may be different for you.

The vaccine is not risk-free, and some of the risk is as yet unknown. That's why it has been released under an EUA and not an approval. That doesn't make it a bad choice, but it does make it a choice that people should evaluate based on their unique circumstances, and in consultation with their doctor and family.

[Dom Bruno]

@VoiceofSanitySometimes
I understand what you're trying to say/theorize, unfortunately adverse reactions to the vaccine seem to be most prevelant with the elderly and those with pre-existing conditiona as well...