Wall Street Breakfast: Trade Spotlight Shifts To Europe – Seeking Alpha

by admin on June 23, 2020

Phase four

Another stimulus package is in the making, though what form it will take is still being debated. “Whatever we do it’ll be much more targeted, much more focused on jobs, bringing back jobs and making sure we take care of our kids,” Treasury Secretary Steven Mnuchin told reporters. Earlier this week, President Trump appeared to suggest that there could be another round of stimulus checks on the way for Americans and details would likely be released “over the next couple of weeks.” Some other policies under consideration include a payroll tax cut and protections for businesses from coronavirus-related liabilities.

Efforts to reshore U.S. manufacturing

The U.S. International Development Finance Corp. is talking to companies about reshoring the manufacturing of PPE, generic drugs and pharmaceutical ingredients. The agency had originally opened its doors in January to boost U.S. overseas development financing efforts, but now appears to be boosting coronavirus response endeavors. The DFC, along with the Pentagon, intends to jointly administer $100M in supply chain reshoring funds – from the $2.3B coronavirus legislation passed in March – that can be leveraged into “tens of billions of dollars” in loans by using it as a pool of capital (similar to the U.S. Treasury’s backing of Fed loan facilities).

Rethinking Hong Kong

Besides the possibility of financial isolation, Hong Kong may see smaller capital investment on the infrastructure and tech fronts. Google (GOOG, GOOGL) told the FT it is considering alternative destinations for a high-speed internet cable after the U.S. government warned it against building the link to Hong Kong due to security concerns of exposing global data to China. The tech giant, together with Facebook (NASDAQ:FB), has backed the 8,000-mile high-capacity subsea cable – known as Pacific Light Cable Network – between the U.S., Hong Kong, Taiwan and the Philippines.

Junk bond sales record

Junk issuers have sold $46.7B of bonds so far in June, topping the previous monthly record of $46.4B in September 2013, according to data compiled by Bloomberg. Companies have hurried to build cash war chests due to the coronavirus pandemic, especially after the Fed announced plans to purchase some types of high-yield bonds to boost liquidity. “You get an invitation to a party from the Fed, Treasury and Congress – they offer to pick you up, take you home and bring you breakfast in bed the next morning,” said Bill Zox, a high-yield bond portfolio manager at Diamond Hill Capital Management. “You know it is going to be a party like no other.”

Money continues to roll into megacaps

Year to date, the Big 5 tech giants have outperformed the S&P 500’s decline of 3.5%. Amazon (NASDAQ:AMZN) is the leader, up 50%, while Microsoft (NASDAQ:MSFT) is ahead by 29%, Apple (NASDAQ:AAPL) is 26% higher, Facebook (FB) is up 19% and Alphabet (GOOG, GOOGL) has climbed 10%. Among the fundamental arguments for the rise has been how these major tech names are insulated from the stay-at-home economic effects. People will still use Facebook and Microsoft’s Windows and Amazon will see increased business with brick-and-mortar retailers shut. Others are arguing that these megacaps are where Fed money is finding its way.

What to do with VMware?

Shares of Dell Technologies (NYSE:DELL) are up 16% in premarket trade as the company weighs options for its 81% stake in VMware (NYSE:VMW), which is worth roughly $50B. It’s specifically looking into a potential spinoff or purchasing the rest of the firm sources told WSJ. Dell originally picked up the VMware shares through its $67B acquisition of storage hardware maker EMC, which closed in 2016. VMW +9% premarket.

Skin-lightening products

Unilever (UL, UN) is facing fresh racism complaints about its Fair & Lovely brand, one of the firm’s best-selling products in India with $560M in annual sales. Employees have grilled top executives at town-hall events about why the company still sells skin-lightening products, while several online petitions have been started as the conversation shifts to social media. “Fair & Lovely upholds principles that no association should be made between skin tone and a person’s achievement, potential or worth,” a Unilever spokeswoman declared. “We’re aware that historic advertising is available on the internet, which is not in keeping with the current values of the brand.” Johnson & Johnson (NYSE:JNJ) recently said it would stop selling similar skin-lightening products under its Clean & Clear and Neutrogena brands.

Meat industry will be obsolete in 15 years

“From a nutritional standpoint our products match the protein quality and content of the animal products that they replace” and “ours is a clear winner from a health and nutrition standpoint,” Impossible Foods CEO Patrick Brown told CNBC. “This is why I think people are increasingly aware plant-based products are going to completely replace the animal-based products in the food world within the next 15 years. That’s our mission. That transformation is inevitable.” While Impossible markets primarily to the food-service industry, rival Beyond Meat (NASDAQ:BYND) has placed its focus on the consumer and grocery sector.

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