Tag: WSJ

More Rate Scares Ahead for Stocks

Mary Pat Campbell

Link: https://www.wsj.com/articles/more-rate-scares-ahead-for-stocks-11614772800

Excerpt:

Expectations of a stronger economy count as a positive development for companies’ earnings prospects, but they are pushing long-term interest rates higher, with the 10-year Treasury recently yielding 1.41% versus 0.93% at the start of the year. That isn’t unusual, since long-term rates typically go up as the economy’s prospects improve, but then again stocks haven’t tended to be as expensive at the start of recoveries as they are now.

The S&P 500 trades at about 22 times analysts’ expected earnings over the next year, according to FactSet, which is close to its highest forward price-earnings ratio in 20 years. In December 2009, six months after the last recession ended, the S&Ps forward P/E ratio was about 14.

As a result, even relatively modest moves upward in Treasury yields, and therefore the relative attractiveness of bonds to stocks, can cause market spasms. This is particularly true of the richly valued technology shares that have been among the biggest market winners since last spring.

Author(s): Justin Lahart

Publication Date: 3 March 2021

Publication Site: Wall Street Journal

The Culture Wars Are Coming to the SEC

Mary Pat Campbell

Link: https://www.wsj.com/articles/the-culture-wars-are-coming-to-the-sec-11614813925

Excerpt:

At Tuesday’s confirmation hearing, Sen. Pat Toomey pressed Gary Gensler on the scope of the SEC’s authority to regulate politics. Let’s say “a publicly-traded company spends a financially insignificant amount of money on, let’s say, electricity,” Mr. Toomey proposed. “Is it material whether that electricity came from renewable sources or not?”

Mr. Gensler resisted answering, saying “it may not be material or it may be material.” This isn’t reassuring. The concept of materiality is crucial to securities regulation because it defines the transparency required for investors to make prudent decisions. The SEC is supposed to protect investors from fraud by making sure they have access to accurate information about a firm’s performance.

But progressives want to use the agency’s watchdog responsibilities as a guise to bend finance in service of unrelated political goals, like climate. Mr. Gensler seemed to reserve the right to impose such politicized disclosure requirements, even when the information is “financially insignificant.”

Author(s): Editorial board

Publication Date: 3 March 2021

Publication Site: Wall Street Journal

New U.S. Cases Ease, but Deaths Tick Higher

Mary Pat Campbell

Link: https://www.wsj.com/livecoverage/covid-2021-03-03/card/18LFgjsjQkJOdGZpqjYK

Graphic:

Excerpt:

There were 55,071 new cases reported in the U.S. for Tuesday, according to the latest data compiled by Johns Hopkins University. That was down from 58,810 a day earlier, and 71,436 a week earlier.

Reported U.S. deaths related to Covid-19 increased Tuesday to 1,924, from 1,566 a day earlier, according to the latest Johns Hopkins data.

While both new cases and deaths are down from January’s highs, deaths have begun to trend upward in the past week. The seven-day moving average of daily reported deaths, which smooths out irregularities in the data, was 2,046 as of Monday, according to a Wall Street Journal analysis of Johns Hopkins data. The 14-day average was 1,984. When the seven-day average is higher than the 14-day average, as it has been since last Wednesday, it indicates deaths are on the rise.

Author(s): Adam Martin

Publication Date: 3 March 2021

Publication Site: Wall Street Journal

The Covid-19 Baby Bust Is Here

Mary Pat Campbell

Link: https://www.wsj.com/articles/the-covid-19-baby-bust-is-here-11614853803?mod=hp_lead_pos10

Graphic:

Excerpt:

A year into the pandemic, early data and surveys point to a baby bust in many advanced economies from the U.S. to Europe to East Asia, often on top of existing downward trends in births.

A combination of health and economic crises is prompting many people to delay or abandon plans to have children. Demographers warn the dip is unlikely to be temporary, especially if the pandemic and its economic consequences drag on.

“All evidence points to a sharp decline in fertility rates and in the number of births across highly developed countries,” said Tomas Sobotka, a researcher at the Wittgenstein Center for Demography and Global Human Capital in Vienna. “The longer this period of uncertainty lasts, the more it will have lifelong effects on the fertility rate.”

Author(s): Margherita Stancati

Publication Date: 4 March 2021

Publication Site: Wall Street Journal

Wall Street Lobbies to Bring More ESG Funds Into 401(k)s

Mary Pat Campbell

Link: https://www.wsj.com/articles/wall-street-lobbies-to-bring-more-esg-funds-into-401-k-s-11614767400?mod=djemwhatsnews

Excerpt:

Money managers are lobbying to scrap a Trump-era rule that makes it difficult for 401(k) plans to invest in socially focused funds.

The Labor Department rule, announced in October, imposed restrictions on what can and can’t be offered as company 401(k) funds. One result is that plans can’t use funds with nonfinancial goals as default investments for employees.

That means 401(k) overseers and managers need to show that environmental, social and governance strategies can boost financial returns—a challenge for the nascent industry. ESG-focused funds are a growing profit center for asset managers.

Lobbyists representing managers, pensions and retirees began making calls to the Biden transition team in the weeks after the rule was announced. Some lobbyists urged the incoming administration to agree not to enforce the rule and place it under review, said people familiar with the matter.

Author(s): Dawn Lim

Publication Date: 2 March 2021

Publication Site: Wall Street Journal

America Went on a Borrowing Binge, but Banks Were Left Out

Mary Pat Campbell

Link: https://www.wsj.com/articles/america-went-on-a-borrowing-binge-but-banks-were-left-out-11612953008

Excerpt:

Large U.S. lenders saw their loan books shrink in 2020 for the first time in more than a decade, according to an analysis of Federal Reserve data by Jason Goldberg, a banking analyst at Barclays. The 0.5% drop was just the second decline in 28 years.

Bank of America Corp.’s loans and leases dropped by 5.7%. Citigroup Inc.’s loans dropped by 3.4% and Wells Fargo & Co.’s shrank by 7.8%. Among the biggest four banks, only JPMorgan Chase & Co. had more loans at the end of the year than the start.

Lenders are flush with cash that they want to put to use, and executives say they are hopeful loan growth will pick up in 2021. Brisk lending typically suggests there is enough momentum in the economy to give companies and consumers the confidence to borrow. But the current weakness suggests questions remain about the vigor of the economic recovery.

Author(s): Ben Eisen

Publication Date: 10 February 2021

Publication Site: WSJ

Flood of Cash Pushes Borrowing Costs to Unusual Lows in Europe

Mary Pat Campbell

Link: https://www.wsj.com/articles/flood-of-cash-pushes-borrowing-costs-to-unusual-lows-in-europe-11612780202

Excerpt:

Italy’s Enel SpA, one of Europe’s biggest electricity producers, has short-term commercial paper that recently offered an annualized yield of minus 0.61%, according to FactSet: That is 0.11 percentage point lower than the ECB’s deposit rate of minus 0.5%.

When interest rates are negative, borrowers pay back less than they were lent when their debt comes due. At Enel’s rate, if it borrowed $100 for a year, it would pay back $99.39. For the lender, in this case the money-market funds that buy commercial paper, the opposite is true. They get back less money.

“It took a couple of years for clients to get their heads around the idea that they’d have to pay to leave money in a safe spot,” said Kim Hochfeld, global head of State Street’s cash business. State Street’s EUR Liquidity LVNAV Fund — worth 6.6 billion euros, equivalent to $7.9 billion — yields minus 0.68% after fees, but that compares with total costs on large bank deposits of up to 1%, she added.

Author(s): Paul J. Davies

Publication Date: 8 February 2021

Publication Site: Wall Street Journal

Junk Has Never Been So Valued

Mary Pat Campbell

Link: https://www.wsj.com/articles/junk-has-never-been-so-valued-11612915150

Excerpt:

The Federal Reserve has pushed down long-term interest rates by buying bonds and committed to keep short-term interest rates at near zero through 2023. While the central bank’s interventions were needed in March, it continued to buy corporate bonds well into the summer when markets didn’t need the support.

Chairman Jerome Powell last month reassured investors that the Fed won’t take away its market support until the economy makes “substantial further progress” toward inflation above 2% and maximum employment. The rush into high-yield corporate and municipal debt has since accelerated with yields dropping due to great demand.

Junk-rated Chicago Public Schools and the city of Detroit recently floated bonds yielding less than 2%. Spreads with the AAA muni-bond benchmark have collapsed. The sages at BlackRock last month recommended high-yield munis for their “diversification benefits” and “high levels of income” and saw “significant value” in Puerto Rican bonds.

Author(s): Editorial board

Publication Date: 9 February 2021

Publication Site: Wall Street Journal

CVS, Walgreens Look for Big Data Reward From Covid-19 Vaccinations

Mary Pat Campbell

Link: https://www.wsj.com/articles/cvs-walgreens-look-for-big-data-reward-from-covid-19-vaccinations-11614681180?mod=djemwhatsnews

Excerpt:

Administering Covid-19 vaccines comes with a valuable perk for retail pharmacies: access to troves of consumer data.

Chains such as CVS Health Corp., Walmart Inc. and Walgreens-Boots Alliance, Inc. are collecting data from millions of customers as they sign up for shots, enrolling them in patient systems and having recipients register customer profiles.

The retailers say they are using the information to promote their stores and services, tailor marketing and keep in touch with consumers. The companies also say the information is critical in streamlining vaccinations and improving record-keeping, while ensuring only qualified people are receiving shots.

Author(s): Sharon Terlep

Publication Date: 2 March 2021

Publication Site: Wall Street Journal

A Letter Sealed for Centuries Has Been Read—Without Even Opening It

Mary Pat Campbell

Link: https://www.wsj.com/articles/a-letter-sealed-for-centuries-has-been-readwithout-even-opening-it-11614679203?mod=djemwhatsnews

Excerpt:

The “virtual unfolding” of the letter—the culmination of a four-year project described in a paper published Tuesday in the journal Nature Communications—points to a new line of historical research into the centuries-old practice of letterlocking. That’s the term used to describe the use of origami-like folds to hide the content of letters before envelopes came into wide use in the mid-1800s.

“This is a dream come true in the field of conservation,” said Jana Dambrogio, the conservator at the research library at the Massachusetts Institute of Technology and one of 11 authors of the paper.

Experts say the technique used to reveal the text of the letter, which includes a type of imaging called X-ray microtomography, could also have applications in healthcare and engineering.

Author(s): Sara Castellanos

Publication Date: 2 March 2021

Publication Site: Wall Street Journal

Many Businesses Support a Minimum-Wage Increase—Just Not Biden’s $15-an-Hour Plan

Mary Pat Campbell

Link: https://www.wsj.com/articles/many-businesses-support-a-minimum-wage-increasejust-not-bidens-15-an-hour-plan-11614604077

Excerpt:

Still, a higher minimum wage puts pressure on smaller businesses that can’t raise wages as easily as large companies, which can adapt by deploying labor-saving technology or modestly adjusting hours for large workforces, said Jonathan Meer, an economist at Texas A&M University.

“It’s a lot harder for Joe’s Hardware,” he said. “We should take note that Amazon — the place with no cashiers — is the one calling for a higher minimum wage.”

Fewer than 250,000 people in the nation’s workforce of 140 million last year were paid exactly the federal minimum wage, which hasn’t changed since 2009, the Labor Department said last week.

Author(s): Eric Morath and Heather Haddon

Publication Date: 1 March 2021

Publication Site: Wall Street Journal

J&J Covid-19 Vaccine Shipments Head for States

Mary Pat Campbell

Link: https://www.wsj.com/articles/j-j-covid-19-vaccine-to-start-arriving-as-soon-as-tuesday-u-s-administration-says-11614603239

Excerpt:

The U.S. Food and Drug Administration on Saturday authorized use of the J&J vaccine. The drug company had made nearly four million doses for initial shipment. The administration said it expected about 20 million doses to be delivered by the end of March.

Distribution will be uneven early on as the company increases production, it said, meaning the bulk of the additional 16 million doses will arrive later in the month.

“We’re getting these doses out the door as soon as they’re available to ensure vaccines get into arms as quickly as possible,” a senior Biden administration official said Sunday.

Author(s): Peter Loftus and Ken Thomas

Publication Date: 1 March 2021

Publication Site: Wall Street Journal