Indoor Dining in New York City Could Be Back on the Table
Gov. Cuomo says decision expected by end of week
The state is considering a plan that would permit indoor dining at a capacity of 25%, and “how and when you do that,” New York Gov. Andrew Cuomo said Wednesday. A decision will come by the end of the week, he said, after consultation with local health officials and New York City Mayor Bill de Blasio.
“I fully understand how difficult it is that they are closed,” said Mr. Cuomo of the city’s restaurants. “On the flip side is how fast this virus can take off.”
After a state court ruling, indoor dining is allowed, with restrictions, in all other areas of the state.
Mr. Cuomo also on Wednesday lifted localized economic and social-gathering restrictions in most areas of the state, including in Staten Island, Brooklyn, Nassau and Suffolk counties, and counties that include Buffalo, Rochester and Syracuse. Those restrictions were part of a so-called microcluster strategy, and the level of restriction was associated with the colors yellow, orange or red, with yellow zones having the fewest restrictions.
Five parts of the state—two areas in the Bronx, as well as areas in Washington Heights, Queens and the Hudson Valley city of Newburgh—remain in a yellow zone, Mr. Cuomo said. Those areas will continue to have limitations on dining and social gatherings, and capacity at houses of worship. Schools will also need to conduct more testing to detect Covid-19.
Mr. Cuomo said he was particularly concerned about the Bronx, where the percentage of people testing positive for Covid-19 was 6.9%, and has been high for a number of weeks. He said he hopes to open a vaccination site for Bronx residents at Yankee Stadium, and limit who can get a vaccine there to just the people in the borough.
Statewide, the percentage of people testing positive for Covid-19 has dropped to 5.44%, marking what Mr. Cuomo said was the end of a postholiday surge of cases.
At the height of that surge, beginning with Thanksgiving, the percentage of New Yorkers testing positive for the coronavirus reached 7.94% on Jan. 4, according to state data.
The state is “functionally out” of vaccines, Mr. Cuomo said, with some 96% of first doses administered. The Democrat added that a federal program to vaccinate people in long-term care facilities had reached everyone in the state. In all, 72% of residents in those facilities ultimately opted for the vaccine.
New York will now stay week-to-week, using vaccines as they come in from federal supplies. Federal plans announced Tuesday by the Biden administration will give states a three-week window into allocation and allow for better planning, said Mr. Cuomo.
Apple beats on top and bottom line driven by beat in every category except Macs; company does not give Q2 guidance; call begins at 17:00 ET
- Reports Q1 (Dec) earnings of $1.68 per share, excluding non-recurring items, $0.27 better than the S&P Capital IQ Consensus of $1.41; revenues rose 21.4% year/year to $111.4 bln vs the $103.24 bln S&P Capital IQ Consensus.
- Apple reports Q1 iPhone revenue of $65.6 bln vs. $59.9 bln ests
- Apple reports Q1 iPad revenue of $8.4 bln vs. $7.5 bln ests
- Apple reports Q1 Services revenue $15.8 bln vs. $15.0 bln ests
- Apple reports Q1 wearables revenue $13.0 bln vs. $11.6 bln ests
- Apple reports Q1 Macs revenue $8.7 bln vs. $8.8 bln ests
- Apple reports Q1 gross margin of 39.8 % vs. 37.9% ests versus 38.4% last year
- "Our December quarter business performance was fueled by double-digit growth in each product category, which drove all-time revenue records in each of our geographic segments and an all-time high for our installed base of active devices," said Luca Maestri, Apple's CFO. "These results helped us generate record operating cash flow of $38.8 billion. We also returned over $30 billion to shareholders during the quarter as we maintain our target of reaching a net cash neutral position over time.
Notable earnings/guidance movers: NOW +3.9%, CCI +1.7%, LVS +1.5%, LEVI +1.2% on upside; WHR -5.3%, TSLA -4.4%, EW -3.4%, CREE -1.6%, AAPL -1.4%, FB -1.3% on downside
- Earnings/guidance gainers: NOW +3.9%, CCI +1.7%, LVS +1.5%, LEVI +1.2%
- Earnings/guidance losers: WHR -5.3%, TSLA -4.4%, EW -3.4%, CREE -1.6%, AAPL -1.4%, FB -1.3%
Tesla misses by $0.23, beats on revs, remains on track to start vehicle production at Berlin and Austin plants this year (864.16 -18.93)
- Reports Q4 (Dec) earnings of $0.80 per share, $0.23 worse than the S&P Capital IQ Consensus of $1.03; revenues rose 44.9% year/year to $10.7 bln vs the $10.38 bln S&P Capital IQ Consensus.
- Automotive gross margin of 24.1% vs. 27.7% last quarter and 22.5% in year ago quarter.
- Adj. EBITDA up 57% yr/yr to $1.85 bln.
- Total production of 179,757 vehicles; total deliveries of 180,667 deliveries, up 61% yr/yr.
- In Berlin and Austin, TSLA remains on track to start vehicle production this year with structural batteries leveraging in-house battery cells. Co is excited to ramp the updated Model S and Model X and deliver its first Tesla Semi by the end of the year.
Closing Stock Market SummaryThe large-cap indices fell more than 2.0% on Wednesday, as risk sentiment was undercut by another day of extreme short squeezes and underwhelming earnings reactions. The S&P 500 (-2.6%) and Dow Jones Industrial Average (-2.1%) gave up their yearly gains in the process. The Nasdaq Composite declined 2.6%, and Russell 2000 declined 1.9%.
GameStop (GME 347.51, +199.53, +135%) remained the prominent example of the short-squeeze mania today, as shares more than doubled (again) in an apparent move fueled by an online community. AMC Entertainment (AMC 19.90, +14.94, +301%), Nokia (NOK 6.55, +1.82, +38.5%), and BlackBerry (BB 25.10, +6.18, +32.7%) were other beneficiaries.
In addition to this frenzied price action, the inability of Microsoft (MSFT 232.90, +0.57, +0.3%) to drive the market higher following its strong earnings report and upbeat guidance was cited as another headwind for sentiment. Put another way, investors took some money off the table ahead of more mega-cap earnings after the close.
Every sector in the S&P 500 closed sharply lower with losses ranging from 1.4% (energy) to 3.8% (communication services). The CBOE Volatility Index surged 61.6% to 37.21 amid increased interest to hedge against further equity weakness.
Starbucks (SBUX 97.87, -6.82, -6.5%), Boeing (BA 194.03, -8.03, -4.0%), Adv. Micro Devices (AMD 88.84, -5.87, -6.5%), and Texas Instruments (TXN 162.93, -8.54, -5.0%) were notable laggards following their earnings reports. On a related note, Starbuck's COO left to become the CEO of Walgreens Boots Alliance (WBA 51.18, +1.99, +4.1%).
In the afternoon, Fed Chair Powell preferred not to comment on the day's market activity, although he said that expectations for fiscal policy and vaccines, instead of monetary policy, have been driving asset prices in recent months. The central bank made no changes to its accommodative policy stance, as widely expected.
U.S. Treasuries finished with modest gains amid the weak performance in the stock market and were less influenced by the Fed today. The 2-yr yield declined one basis point to 0.12%, and the 10-yr yield declined three basis points to 1.01%. The U.S. Dollar Index rose 0.5% to 90.65. WTI crude futures increased 0.4% to $52.84/bbl amid bullish inventory data.
Reviewing Wednesday's economic data:
- New orders for durable goods increased 0.2% m/m in December (consensus 0.9%) following an upwardly revised 1.2% increase (from 0.9%) in November. Excluding transportation, orders rose 0.7% m/m (consensus 0.5%) following an upwardly revised 0.8% increase (from 0.4%) in November.
- The key takeaway from the report is that manufacturing activity for durable goods held up reasonably well in December despite the surge in coronavirus cases and restrictive measures aimed at curbing the spread.
- The MBA Mortgage Applications Index decreased 4.1% following a 1.9% decline in the prior week.
Looking ahead to Thursday, investors will receive the advance estimate for Q4 GDP, weekly Initial and Continuing Claims, New Home Sales for December, the Conference Board's Leading Economic Index for December, and advance December readings for Intl Trade in Goods, Retail Inventories, and Wholesale Inventories.
- Russell 2000 +6.8% YTD
- Nasdaq Composite +3.0% YTD
- S&P 500 -0.1% YTD
- Dow Jones Industrial Average -1.0% YTD
‘Short squeeze’ spreads as day traders hunt next GameStop
Biden administration is ‘monitoring the situation’ after surge in targeted stocks on both sides of Atlantic
A “short squeeze” that started on Wall Street swept across the globe on Wednesday, triggering another day of frenetic moves in the share prices of companies with large bets levied against them.
The White House press secretary Jen Psaki said the Biden administration was “monitoring the situation” as shares of companies including GameStop, the hard-hit cinema owner AMC and BlackBerry surged in a volatile day of trading.
The dramatic moves highlight the growing influence of retail traders, who have organised on the message board site Reddit. The group has focused on pushing up stocks that are the subject of large short bets by hedge funds. Their success in rallying the stock price of GameStop has vindicated a group now targeting companies on both sides of the Atlantic.
Stocks such as the US home goods retailer Bed Bath and Beyond, the Finnish telecoms group Nokia, the German pharmaceuticals company Evotec, the former Financial Times owner Pearson and the Polish games developer CD Projekt rose strongly in intraday trading.
Shares in the cinemas group AMC, which earlier this week clinched a rescue financing, rose more than 300 per cent at one point on Wednesday, while the retailer Express more than doubled in value. GameStop, which has been at the centre of the retail trading bonanza, shot up more than 100 per cent.
The gains stood in stark contrast to a broad market decline triggered by concerns about the rollout of vaccines and pandemic risks to the economy. The US S&P 500 index slid 2.4 per cent and the tech-heavy Nasdaq Composite was down 2.2 per cent.
“It’s like a wolf pack seeking out the weakest member of the herd,” said Steve Solnick, chief strategist for Interactive Brokers.
The flash rallies prompted TD Ameritrade to put trading restrictions in place for several securities, including GameStop and AMC. The company said the limits could include restricting short sales or requiring 100 per cent margin for certain trades, moves it said would mitigate risks for itself and its clients.
“Restrictions vary by security, but could include things like allowing only long orders on options, 100 per cent margin requirements, and restricting short sales,” the brokerage said. “We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors.”
Some of the companies whose shares surged were targets of Melvin Capital, a hedge fund that has been singled out by day traders. Those included Evotec, which was up 9.6 per cent; CD Projekt, which rose 5.3 per cent; and the German battery manufacturer Varta, which rose 12 per cent before trimming its gains to trade up 6.2 per cent.
Melvin on Wednesday revealed it had closed its GameStop position, having sustained a multibillion-dollar loss on its shorts since the start of this year.
Retail investors are using “a tried-and-true hedge fund strategy of swarming crowded trades held by weak-handed investors”, said Andrew Beer, managing member at fund firm Dynamic Beta Investments.
In contrast to in the US, which has limited disclosure on short bets, hedge funds and other investors have to disclose when they have shorted more than 0.5 per cent of a company’s stock in the EU and the UK, making it easier to target a fund’s positions.
Melvin’s latest disclosure shows it has bet against more than 6 per cent of Evotec’s shares, making it the largest single wager against a European company by percentage of shares shorted, according to the data provider Breakout Point. The US hedge fund’s bet against Varta is the fifth largest.
The “short squeeze phenomenon fuelled by retail investors’ discussions is spilling over to Europe”, said Ivan Cosovic, founder of Breakout Point. “We are recently detecting some European stocks being touted as 'the next GameStop’ among retail investors.”
The targeting of hedge funds will be viewed with irony by many financial market insiders, given that such funds are often the protagonists in short selling attacks on troubled companies.
Heavily shorted shares with no link to Melvin Capital also rose on Wednesday. Shares in Pearson, the British education publishing company that is the third-most shorted stock in Europe, according to IHS Markit, climbed 14 per cent to close at its highest level in 16 months. Daniel Sundheim’s New York-based hedge fund D1 Capital Partners, which has also been shorting Varta, has the biggest bet against Pearson, at 3.8 per cent of its share capital.
The real estate company Wereldhave, in which Woodson Capital has disclosed a 4.2 per cent short position and London-based Adelphi has a 3.6 per cent bet, rose about 5 per cent.
Hedge funds in Europe are now fervently scouring lists of most-shorted stocks and message boards such as Reddit for any signs that their short bets could be in trouble.
“Any good hedge fund group will be looking at this,” said the head of one multibillion-dollar European hedge fund firm.
One European hedge fund manager who specialises in short selling described the recent stock market rallies as “insane”, but said the elevated share prices of troubled companies would “make a great opportunity” for short sellers that survived the week’s mayhem.
Whirlpool beats by $0.23, beats on revs; guides FY21 EPS midpoint above consensus, revs above consensus (213.26 +6.84)
- Reports Q4 (Dec) earnings of $6.64 per share, excluding non-recurring items, $0.23 better than the S&P Capital IQ Consensus of $6.41; revenues rose 7.7% year/year to $5.8 bln vs the $5.64 bln S&P Capital IQ Consensus.
- Co issues guidance for FY21, sees EPS of $19.00-20.00, excluding non-recurring items, vs. $19.19 S&P Capital IQ Consensus; sees FY21 revs growth of ~6% (the impact of currency on net sales for future periods is not included), which translates to ~$20.62 bln vs. $20.15 bln S&P Capital IQ Consensus.
- Cash provided by operating activities of ~$1.55 bln
- Free cash flow of $1 billion or more
- "As we enter into 2021, we continue to see signs of economic recovery - such as positive demand and encouraging structural housing trends - and remain well-positioned to drive sustained shareholder value over the long term."
Facebook beats by $0.64, beats on revs, expects revenue growth rate to remain stable or modestly accelerate sequentially in Q1 and Q2, reaffirms FY21 expense and capex guidance
- Reports Q4 (Dec) earnings of $3.88 per share, $0.64 better than the S&P Capital IQ Consensus of $3.24; revenues rose 33.2% year/year to $28.1 bln vs the $26.4 bln S&P Capital IQ Consensus.
- DAUs were 1.84 billion on average for December 2020, an increase of 11% year-over-year.
- MAUs were 2.80 billion as of December 31, 2020, an increase of 12% year-over-year.
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Outlook: "... Looking forward, a moderation or reversal in one or both of these trends could serve as a headwind to our advertising revenue growth. At the same time, in the first half of 2021, we will be lapping a period of growth that was negatively impacted by reduced advertising demand during the early stages of the pandemic. As a result, we expect year-over-year growth rates in total revenue to remain stable or modestly accelerate sequentially in the first and second quarters of 2021. In the second half of the year, we will lap periods of increasingly strong growth, which will significantly pressure year-over-year growth rates.
- We expect 2021 total expenses to be in the range of $68-73 billion, unchanged from our prior outlook. This is driven by investments in technical and product talent as well as continued growth in infrastructure costs.
- We continue to expect 2021 capital expenditures to be in the range of $21-23 billion, driven by data centers, servers, network infrastructure, and office facilities. Our outlook includes spend that was delayed from 2020 due to the impact of the pandemic on our construction efforts.