WSJ : Biden Signs Buy American Order for Government Procurement

Biden Signs Buy American Order for Government Procurement
Order revises definition of U.S.-made products as president seeks to boost domestic manufacturing

WASHINGTON—President Biden signed an executive order Monday imposing tougher rules on government procurement practices to increase purchases of products made in the U.S., a step toward fulfilling his Buy American campaign pledge to strengthen domestic manufacturing.

The new policies will include tightening the government procurement rules to make it harder for federal agencies to purchase imported products, revising the definition of American-made products and raising local-content requirements. The executive order also aims to ensure that small and midsize businesses will have better access to information needed to bid for government contracts.

“Under the Build Back Better recovery plan, we will invest hundreds of billions dollars in buying American products and materials to modernize our infrastructure and our competitive strength will increase in a competitive world,” Mr. Biden said at a press conference.

Some economists and trade experts have questioned the impact of such policies, citing the small size of government procurement in the overall economy, and noted that risks might include higher prices and retaliation against U.S. exports.

While the impact might be small, the new order hints at the broad shape of Mr. Biden’s trade policy and its focus on American workers. It states that Mr. Biden is committed to working with partners and allies to modernize international trade rules, including those related to government procurement, “to make sure all countries can use their taxpayer dollars to spur investment in their own countries.”

James Wyner, chief executive of advanced-fabrics maker Shawmut Corp. based in West Bridgewater, Mass., said he is hopeful that the renewed focus on Buy American rules will encourage the federal government to procure more of the medical gowns his company started making during the pandemic.

More than 100 workers are producing gowns for the Defense Logistics Agency under a contract that is set to finish in February. Mr. Wyner said politicians and the public have realized the dangers of relying on foreign suppliers for critical goods and he wants congress to extend Buy American requirements to more types of products.

“Both economically and politically this can be made to work,” he said.

Mr. Biden’s Buy American initiative has similarities to former President Donald Trump’s domestic-preference effort, which was part of America First policy that featured tariff wars with China and other trading partners.

The new Biden policy will affect federal agencies’ direct purchase contracts for goods and services, which totaled $586 billion in fiscal 2019, according to the Government Accountability Office. The GAO said foreign products accounted for less than 5% of direct federal procurement but has warned that the actual amount might be larger owing to system errors and limitations.

While direct government procurement represents a small sliver of the U.S. economy, the new policy’s impact on domestic companies and jobs could be significant if the Buy American standards are applied to the massive spending plans on infrastructure and new energy pursued by the new administration.

“This executive order will close loopholes that allow agencies to sidestep Buy American requirements and increase the thresholds for domestic content,” Richard Trumka, president of the AFL-CIO, said in a statement. “This order is a good first step in revitalizing U.S. manufacturing.”

Groups representing large exporters cautioned against protectionist policies, such as weakening of the government procurement agreement under the World Trade Organization, that could prompt other nations to shut their doors on U.S. companies in return.

WSJ : Citadel, Point72 to Invest $2.75 Billion Into Melvin Capital Management

Citadel, Point72 to Invest $2.75 Billion Into Melvin Capital Management
Investments are for non-controlling revenue shares in the hedge fund, which is down nearly 30% for 2021 through Friday

Citadel LLC and Point72 Asset Management are investing $2.75 billion into hedge fund Melvin Capital Management, which has been hard hit by a series of short bets to start the year.

The influx of cash is expected to help stabilize Melvin, which in 2021 has lost 30% through Friday, said people familiar with the firm. Melvin started the year with $12.5 billion and had been one of the best performing hedge funds on Wall Street in recent years. The losses stem from Melvin’s array of short bets against companies and have stunned clients and other traders. Among other short positions, Melvin bet against the surging stock of videogame retailer GameStop Corp.

Citadel and its partners are investing $2 billion and Point72, which already had more than $1 billion invested in Melvin as of 2019, $750 million. The investments are in Melvin’s fund and include non-controlling revenue shares in the firm. Melvin founder Gabe Plotkin was a top portfolio manager at Point72’s predecessor firm, SAC Capital Management, before he left to start Melvin.

It couldn’t be determined how much of a revenue share Citadel and Point72 would get.

Melvin had been down about 15% for the year through late last week—but heavily shorted stocks soared Friday. Goldman Sachs Group Inc.’s basket of the 50 stocks with the highest short interest as a share of market capitalization soared Friday, bringing its gains for the year to 25%. In comparison, the S&P 500 had gained 2.4% for the period. Unlike many other hedge funds, Melvin has an expansive and aggressive short book.

The deal came together rapidly. Mr. Plotkin said in a statement Monday, “I am incredibly proud to partner with Ken Griffin and Steve Cohen. The team at Melvin is eager to get to work and reward the confidence of these two great investment icons.”

Point72 founder Mr. Cohen in a statement called his former employee “an exceptional investor and leader. We are pleased to have the opportunity to invest additional capital.” Citadel founder Ken Griffin applauded Melvin’s results over the history of the firm and said, “We have great confidence in Gabe and his team.”

Melvin since its 2014 founding has returned an average of 30% a year.

>>> US After Hours Summary: Yellen gets confirmed; JJSF -13.9% and BOOT -3.1% fa

After Hours Summary: Yellen gets confirmed; JJSF -13.9% and BOOT -3.1% fall on earnings; STAA +5.8% gets added to S&P MidCap 400

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: IPAR +5% (guides Q4 revs above consensus), GGG +4.2%, FUL +3.4%, HXL +1.5%, ELS +1.2%, STLD +1.2%, LPG +0.7%, AGNC +0.5%, BRO +0.4%

Companies trading higher in after hours in reaction to news: OSTK +11.9% (announces partnership with Pelion Venture Partners to oversee Medici Ventures' blockchain assets), ICFI +10.2% (selected by EPA for Energy Star Services contract), BDGE +8.2% (to be added to S&P SmallCap 600), PBH +7.1% (to be added to S&P SmallCap 600), STAA +5.8% (to be added to S&P MidCap 400), APO +3.9% (new CEO), IAC +2.4% (Vimeo raises $300 mln in primary equity), NBTX +2.1% (announces new collaboration with SNY), BCRX +2.1% (Sarissa Capital Mgmt discloses 5.0% stake), ATNX +1.2% (CEO now recuperating from COVID-19 at home), MRSN +0.6% (Sarissa Capital Mgmt discloses 5.5% stake), BP +0.2% (reduces oil exploration staff to focus more on renewable energy, according to Reuters), PSN +0.1% (JV awarded DSB large framework contract), AAPL +0.1% (announces transition of Dan Riccio to a new role)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: JJSF -13.9%, KRMD -12.3% (guides FY20 revs below consensus; also announces CEO transition), BOOT -3.1%, AUY -1.6%, EPRT -0.3% (guides FY21 AFFO slightly below consensus), BXS -0.1%

Companies trading lower in after hours in reaction to news: QUMU -11% (stock offering), LPCN -9.1% (stock offering), SEEL -8.3% (stock offering), CVAC -3.8% (stock offering), ERF -3.6% (to acquire Bruin E&P HoldCo), ASO -2.2% (stock offering), SEER -1.7% (stock offering), CZR -0.5% (announces strategic investment in SuperDraft)

>>> US Close Dow -0.12% S&P +0.36% Nasdaq +0.69% Russell -0.25%

Closing Stock Market Summary

The S&P 500 (+0.4%) and Nasdaq Composite (+0.7%) closed at record highs on Monday in a volatile session, as gains in the mega-caps and other defensive-oriented stocks outweighed losses in cyclical stocks. The Dow Jones Industrial Average (-0.1%) and Russell 2000 (-0.3%) closed in the red but off session lows. 

The session started on a hot note, with shares of Apple (AAPL 142.92, +3.86, +2.8%) and Tesla (TSLA 880.80, +34.16, +4.0%) leading the mega-cap charge as analysts raised their price targets ahead of their earnings reports this week, and stocks with high short-interest positions like GameStop (GME 76.79, +11.78, +18.1%) continued to squeeze short sellers. GME shares were up 145% at one point today. 

At their intraday morning highs, the S&P 500 was up 0.5%, the Nasdaq was up 1.4%, and the Russell 2000 was up 1.2% at an all-time high. The Dow was never positive. The major indices, however, quickly took a relatively precipitous fall into negative territory on no specific news catalyst, suggesting a profit-taking motive among investors. 

True to recent usual form, investors bought the intraday dip, but generally preferred to stick with most of the mega-cap names and lower-beta stocks within the S&P 500 utilities (+2.0%), consumer staples (+0.9%), real estate (+0.8%), and health care (+0.7%) sectors. The information technology sector rose 0.9%.  

The cyclical energy (-1.1%), financials (-0.8%), industrials (-0.7%), and materials (-0.5%) sectors finished lower amid news that President Biden's $1.9 trillion stimulus deal is facing bipartisan resistance and could be pushed back to mid-March. The latter was an observation from Senate Majority Leader Schumer. 

Lingering recovery concerns contributed to increased demand for longer-dated Treasuries, which caused some curve-flattening activity that pressured the financials space. The 10-yr yield fell five basis points to 1.04%, versus a flat reading on the 2-yr yield (0.12%). The U.S. Dollar Index increased 0.2% to 90.37. WTI crude futures rose 0.8%, or $0.44, to $52.77/bbl.

In other developments, Moderna (MRNA 147.00, +15.98, +12.2%) said its COVID-19 vaccine does protect against the variants that originated in the UK and South Africa, President Biden signed an executive order aimed at restoring the competitiveness of domestic manufacturers, and California Governor Newsom confirmed that the stay-at-home order has been removed in all regions.

Investors did not receive any notable economic data on Monday. Looking ahead, the Consumer Confidence Index for January, the S&P Case-Shiller Home Price Index for November, and the FHFA Housing Price Index for January will be released on Tuesday.

  • Russell 2000 +9.5% YTD
  • Nasdaq Composite +5.8% YTD
  • S&P 500 +2.6% YTD
  • Dow Jones Industrial Average +1.2% YTD

NY Post : Hedge fund billionaire warns inequality in US may spur

Hedge fund billionaire warns inequality in US may spur ‘terrible civil war’

Billionaire investor Ray Dalio unleashed a tweetstorm warning that America is “on the brink of a terrible civil war” because of widening inequality.
Dalio, the 71-year-old founder of the giant hedge fund Bridgewater Associates, tweeted on Sunday that he was pleased by Biden’s Inauguration Day rhetoric of unity. But the Wall Street tycoon sounded less optimistic about how quickly and easily the new administration can repair the nation’s economic and political fissures.
“I believe we are on the brink of a terrible civil war,” he tweeted. “Where we are at an inflection point between entering a type of hell of fighting or pulling back to work together for peace and prosperity that addresses the big wealth, values, and opportunity gaps we’re now seeing.”
Dalio — whose net worth last year was estimated by Forbes at $18.6 billion, making him the 69th richest person in the world — has been talking publicly about the dangers of growing wealth inequality and rabid partisanship for years, calling it a “national emergency.”
As recently as December, Dalio took to his LinkedIn account to show that economic data predicted the country “is at a tipping point in which it could go from manageable internal tension to revolution and/or civil war.”
“Good words and spirit aren’t enough,” Dalio tweeted on Sunday. “People will have to agree on both how to grow the pie and how to divide it well. That will require revolutionary change.”

Since stepping back from day-to-day management of the $160 billion Bridgewater fund in 2017, Dalio has taken on the role of a thought leader, publishing a book of his management philosophy titled “Principles” and offering his thoughts on markets and global economics on social media.
Dalio’s mood is dark of late. His 42-year-old son Devon was killed in a car accident just before Christmas in the family’s hometown of Greenwich, Conn.
That said, Dalio promised his Twitter followers that he would stay on top of the situation and do what he can to stave off a second American civil war.
“Our country is still in a terrible financial state and terribly divided,” Dalio concluded at the end of his tweetstorm. “I will monitor how those good intentions are turning into good actions and keep you posted.”

>>> US Gapping up

Gapping up
In reaction to earnings/guidance
:

  • CLF +6.2%, BHVN +4.3%, OPRX +3%, CADE +2.6%, KMB +1.7%, PHG +1.1%

M&A news:

  • TSIA +82.6% (TS Innovation Acquisitions and Latch to merge and become publicly listed company)
  • IACA +29.3% (ION Acquisition Corp: Taboola to become NYSE listed at an implied $2.6 bln valuation via a merger with ION Acquisition Corp)
  • WPF +9.1% (Foley Trasimene Acquisition Corp. and Alight Solutions (ALIT) confirm merger)
  • LCY +2.6% (Landcadia Holdings III and HMAN Group Holdings entered into merger agreement that will result in Hillman becoming a publicly listed company named Hillman Solutions Corp with ticker "HLMN") . 

Other news:

  • EXPR +125.1% (extends momentum after surging by +52% during Friday's session)
  • SPRQ +50% (Sunlight Financial to list on NYSE through merger with Apollo (APO) -Affiliated Spartan Acquisition Corp. II)]
  • AUPH +42% (receives FDA approval for LUPKYNIS)
  • GME +40.6% (continued squeeze)
  • AMC +36.5% (raises $917 mln of fresh investment capital since mid-December of 2020; increased liquidity should allow the company to make it through this winter; also entered into an equity distribution agreement sell up to 50,000,000 shares of Class A common stock through an "at-the-market" offering program) GEVO +16.7% (extends momentum after surging by +13% during Friday's session)
  • NCTY +15.4% (signed five legally binding MOUs w/ 5 Bitcoin mining machine owners to purchase Bitcoin mining machines by the issuance of Class A ordinary shares)
  • DTIL +9.1% (received a Notice of Allowance from the U.S. Patent and Trademark Office for a patent application covering PBCAR19B, a next-generation, stealth cell, CD19 product candidate for patients with relapsed/refractory (R/R) Non-Hodgkin Lymphoma)
  • LX +6.1% (achieves 2020 loan origination target)
  • ABEO +3.8% (announces successful type B meeting with FDA for pivotal phase 3 VIITAL study of EB-101 in Recessive Dystrophic Epidermolysis Bullosa)
  • CLPT +2.3% (files for $120 mln mixed securities shelf offering)
  • CNNE +2.2% (announces $250 million investment in Foley Trasimene Acquisition Corp. (WPF) and Alight Solutions Merger)
  • KRNY +1.6% (authorizes 5% stock repurchase plan)
  • ARWR +1.1% (files IND for phase 2b study of ARO-ANG3 for treatment of mixed dyslipidemia)
  • AZN +0.8% (reports Calquence met primary efficacy endpoint in head-to-head trial against ibrutinib; receives approval in Japan for treatment of relapsed or refractory chronic lymphocytic leukaemia)

Analyst comments:

  • CNST +3.9% (upgraded to Outperform from Market Perform at BMO Capital Markets)
  • REGN +3.9% (upgraded to Outperform from Market Perform at BMO Capital Markets)
  • MOS +2% (upgraded to Buy from Neutral at Citigroup)
  • AEO +1.6% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)
  • CAKE +1% (upgraded to Neutral from Underweight at JP Morgan)
  • MED +1% (upgraded to Buy from Hold at Jefferies)
  • CRM +0.8% (upgraded to Hold from Sell at Loop Capital)