MARKET WRAPS
Watch For:
U.S. Employment Report for November; U.S. Factory Orders for
October; Canada Labor Force Survey for November; Canada
International Reserves for November; Bank of Montreal 4Q
earnings.
Opening Call:
Stock futures wobbled, while oil prices continued to rise after
OPEC and a group of Russia-led oil producers agreed to continue
pumping more crude.
Investors are grappling with the unclear impact of Omicron for
the global economy. The variant has triggered fresh restrictions
around the world, throwing up new obstacles to overseas travel just
as it was starting to bounce back from last year's Covid-19
measures. Scientists are trying to gauge how effective current
vaccines will be against the variant.
"What we see now this week since we had the Omicron news is
extremely high volatility and extreme nervousness in markets," said
Carsten Brzeski, ING Groep's global head of macro research. He
expects this to continue until more is known about Omicron.
Brent crude futures, the benchmark in global oil markets rose
after OPEC and a group of Russia-led oil producers agreed Thursday
to continue pumping more crude, betting that pent-up demand in a
post-lockdown world would outweigh any hit to economic activity
from the recent Covid-19 permutations.
But the group said its session would remain open, a technical
move that would allow it to reconvene quickly and change course if
the Covid-19 situation changes dramatically.
Investors are awaiting data at 8:30 a.m. ET on how many jobs
U.S. employers added in November. Employers say they are eager to
hire from a depleted pool of workers, leading to increased
bargaining power and rising wages for many employees.
A strong rebound in the labor market could impact the Federal
Reserve's timeline for paring back some of its monetary policy
support that has supported asset prices.
"After a week of mixed macro news, some stronger news would be
good for the market," Mr. Brzeski said.
Stocks to Watch:
Shares of DocuSign were sinking in premarket trading Friday
after the e-signature software company issued a fourth-quarter
forecast that missed estimates.
Analysts at Citigroup said DocuSign "delivered one of the
biggest [Software as a Service] whiffs in recent memory."
The company said it expects revenue for the fiscal fourth
quarter ending Jan. 31, of $557 million to $563 million, below
analysts' expectations of $573.8 million. DocuSign expects
fourth-quarter billings of $647 million to $659 million. Analysts
were forecasting fourth-quarter billings of $705.4 million,
according to FactSet.
Tesla's China business is recalling 21,599 locally made Model Ys
due to issues with auto parts from suppliers.
The company has filed the recall plans with China's top market
regulator, according to a notice posted Friday by an affiliate of
the State Administration for Market Regulation.
A component known as a steering knuckle, which allows the wheels
to turn, might be deformed or break while the car is in use,
increasing the risk that an accident could occur, the notice
said.
Tesla Shanghai will carry out related checks on the affected
vehicles for free and replace substandard steering knuckles, the
regulator said.
The recall, which affects vehicles manufactured between Feb. 4
and Oct. 30, isn't the first time the company has had to deal with
safety issues in the world's largest auto market.
Forex:
The dollar could receive a further boost from U.S. nonfarm
payrolls data, particularly after Federal Reserve Chair Jerome
Powell said earlier this week that inflation no longer looks
transitory, ING said.
Strong data would add to the view that the Fed could remove
monetary stimulus more quickly, it said.
"Any sharper than expected drop in the unemployment rate (3.8%
has been suggested as a metric for full employment and the start of
tightening) or sharper rise in average hourly earnings (e.g. more
than 0.4% month-on-month) could drive the dollar higher today."
The consensus in a WSJ poll is for nonfarm payrolls to rise by
573,000 and an unemployment rate of 4.5%.
The Turkish lira fell after ratings agency Fitch downgraded the
country's outlook to "negative" from "stable" and following data
that showed inflation accelerated.
Fitch said premature interest rate cuts and the prospect of
further easing have weakened domestic confidence, reflected in the
lira's sharp depreciation and rising inflation, which create risks
to macroeconomic and financial stability and could re-ignite
external financing pressures.
Data on Friday showed consumer prices jumped 21.31% year-on-year
in November after rising 19.89% in October.
With no signs President Recep Tayyip Erdogan will permit large
rate rises, the lira will struggle to recover and inflation will
remain very high through most of the next six-to-nine months,
Capital Economics economist Jason Tuvey said.
Bonds:
In bond markets, the yield on the benchmark 10-year Treasury
note ticked down to 1.446% from 1.447% Thursday.
Within a year, the monetary policy environment changed from "QE
infinity" and "lower interest rates for longer" to one
characterized by a global, generalized and rapid rise in interest
rates, said Gergely Majoros, member of Carmignac's investment
committee.
With this backdrop, Carmignac remains "very cautious" on core
sovereign bonds and very selective in corporate bonds, while it
sees value niches in emerging-market bonds and equity markets, he
said.
Majoros said that in an environment where inflation should
persist longer, Carmignac's risk management focuses on an active
management of duration exposure, cash and short-term instruments
which are the most suited in episodes of volatility, and the USD
given its safe-haven status and dynamics.
Pimco maintains a positive view on spread securities from the
eurozone periphery, especially Italy, while focusing on receiving
adequate compensation for policy uncertainty, Konstantin Veit,
portfolio manager and head of European rates, said.
Given the euro area's unique institutional structure and uneven
macroeconomic conditions, Pimco expects yields in the region to
remain relatively more anchored than elsewhere in the world, and
Pimco therefore is positioned rather independently from benchmark
indexes with a view to overall duration, he said.
"While starting valuations offer limited room for spread
tightening and the macroeconomic outlook remains highly risky, a
less crisis-prone euro area generally bodes well for risky assets,"
he said.
Commodities:
Brent crude oil rose after OPEC+ pressed ahead with plans to
raise oil production by 400,000 barrels a day in January despite
the emergence of the Omicron coronavirus variant and the recent
move by oil consuming nations to tap strategic reserves.
Prices fell after the decision on Thursday but then rebounded on
the day and continue higher Friday.
Goldman Sachs's Damien Courvalin points to the alliance's
promise to immediately adjust their plans should the situation
require it. Similarly, while OPEC+ will raise production in
January, the small increase exacerbates "the long-term
deficit...[and] we believe current price levels offer compelling
opportunities to reposition for the ongoing structural bull
market," he added.
London gold prices were flat, with the selloff in the precious
metal appearing to lose steam. The prospect of the Fed tapering its
asset-buying program has boosted the U.S. dollar this week, putting
pressure on gold.
That is despite the rising risk aversion and asset selloffs that
have come with the emergence of the Omicron coronavirus variant,
said Oanda's Jeffrey Halley.
LME three-month copper futures were, after gentle losses on
Thursday, with most metals prices moving higher as well.
TODAY'S TOP HEADLINES
Covid-19 Vaccine Demand Strains CVS, Walgreens
The U.S. has plenty of Covid-19 vaccines but retail pharmacies
are struggling to quickly administer them in some places.
Vaccine seekers in some states face waits of days or weeks for
doses as local health officials hustle to improve access to meet
surging demand. CVS Health Corp., Walgreens Boots Alliance Inc. and
Walmart Inc., which are facing staffing shortages, now say they may
not be able to accommodate people without appointments.
Citigroup Applies for China Securities License
Citigroup Inc. has applied for a securities license in China,
according to a person familiar with the matter, as the New
York-based banking giant eyes a bigger presence in the world's
second-largest economy.
The bank recently submitted its application to the China
Securities and Regulatory Commission, the person said. Citigroup is
also planning to apply for a futures license in the coming months
and intends to hire around 100 people in mainland China in the next
two years to support its expansion onshore, the person added.
Lyft Poaches Amazon Executive to Lead Its Finances
Lyft Inc. poached an Amazon.com Inc. executive to become its
next finance chief, a change in the ride-hailing firm's C-suite
that comes shortly after the company reached an important
profitability milestone.
San Francisco-based Lyft on Thursday said Elaine Paul has been
named chief financial officer, effective Jan. 3. Ms. Paul succeeds
current CFO Brian Roberts, who is stepping down after seven years
in the role but will stay on as an adviser until June 2022. His
departure as CFO isn't the result of any disputes or disagreements,
Lyft said in a filing with securities regulators.
Elon Musk's Tesla Share-Selling Spree Tops $10 Billion
Elon Musk has now unloaded more than $10 billion in Tesla Inc.
stock as the billionaire's share-selling spree involving his
holdings in the electric-vehicle maker stretched into a second
month.
Mr. Musk on Thursday sold more than 934,000 Tesla shares valued
at just over $1 billion, according to regulatory filings. The sales
came as Mr. Musk exercised more than 2.1 million vested Tesla stock
options.
Google Delays Required Return to Office for Employees
Alphabet Inc.'s Google said it is delaying its required
return-to-office plans that were scheduled to start Jan. 10 at the
earliest for U.S. offices.
The tech company said it would wait until next year to decide
when its office-return plan will take effect, according to an email
that Chris Rackow, Google's vice president of global security, sent
to employees Thursday. Google's shifting office-reopening plans
were earlier reported by CNBC.
Didi Global Plans to Delist From New York Stock Exchange
Didi Global Inc. plans to delist its shares in the U.S. and
pursue a listing in Hong Kong, a dramatic reversal just months
after the Chinese ride-hailing group's ill-fated initial public
offering in New York.
The move, which Didi said Thursday was supported by its board,
comes as authorities in Beijing wrap up a cybersecurity probe into
the company. It would mark an escalation in the financial
decoupling between the U.S. and China, which has already seen
several Chinese companies expelled from American exchanges.
FTC Challenges Nvidia's Deal for Arm Holdings
WASHINGTON-The Federal Trade Commission on Thursday sued to
block U.S. chip supplier Nvidia Corp.'s proposed landmark takeover
of semiconductor-design specialist Arm Holdings, arguing the
chip-industry deal is anticompetitive.
The lawsuit marks the beginning of what is likely to be an
aggressive antitrust campaign by the FTC under the leadership of
Chairwoman Lina Khan, a progressive tapped by President Biden in
June to lead the agency.
November Likely Saw Strong Job Gains, but Omicron Threat
Looms
Lower Covid-19 case numbers likely helped propel the U.S.
economy and powered strong job gains in November, economists say,
but the new Omicron variant could jeopardize that progress.
Economists surveyed by The Wall Street Journal estimate that
employers added 573,000 jobs in November, roughly on par with
October. The unemployment rate is expected to tick down to 4.5%
from 4.6%. The Labor Department is schedule to release November
employment figures at 8:30 a.m. Eastern time Friday.
Companies Cling to Libor as Key Deadline Nears
U.S. companies need to give up the London interbank offered rate
for new debt at the end of December. Many want to close just one
more deal before that.
Come Jan. 1, banks won't be able to issue new loans or other
financial contracts using Libor, which underpins trillions of
dollars in corporate loans, derivatives and home mortgages. They
will, however, be able to keep referencing Libor for debt issued
before the year-end deadline through June 2023.
Citigroup Applies for China Securities License
Citigroup Inc. has applied for a securities license in China,
according to a person familiar with the matter, as the New
York-based banking giant eyes a bigger presence in the world's
second-largest economy.
The bank recently submitted its application to the China
Securities and Regulatory Commission, the person said. Citigroup is
also planning to apply for a futures license in the coming months
and intends to hire around 100 people in mainland China in the next
two years to support its expansion onshore, the person added.
A Couple Stored IRA Gold at Home. They Owe the IRS More Than
$300,000.
It's official: Owners of individual retirement accounts with
assets invested in gold and silver coins can't store them in a safe
at their home.
So ruled the judge in a recent Tax Court case, Andrew McNulty et
al. v. Commissioner. The decision will cost Mr. McNulty and his
wife Donna dearly-taxes of nearly $270,000 on about $730,000 of IRA
assets, plus penalties likely to exceed $50,000.
Asia-Pacific Nations Use Tougher Tactics to Combat Omicron
Variant
Countries in the Asia-Pacific region are creating tougher rules
for those infected with the Omicron Covid-19 variant, as
governments move more aggressively than they have against all other
previous iterations, including Delta.
The modifications come as Omicron begins to reach the
Asia-Pacific region, with Australia, Hong Kong, India, Japan, South
Korea, Singapore and Malaysia reporting confirmed cases. The
initial moves focused on national travel restrictions and border
tightenings.
Eurozone Retail Sales Rose in October, But Missed
Expectations
Eurozone retail sales rose in October but failed to meet
expectations, the European Union's statistics agency Eurostat said
Friday.
The volume of retail sales increased 0.2% in October compared
with the previous month, after a downwardly revised 0.4% decrease
in September, Eurostat said. Economists polled by The Wall Street
Journal had forecast a 0.3% increase for October.
Omicron's Severity Will Take More Time to Assess, Doctors
Say
JOHANNESBURG-It is still too early to tell whether Covid-19
caused by the new Omicron variant is milder or more severe than
that from other strains of the coronavirus, doctors tracking a
rapidly growing outbreak in South Africa said Friday.
The country, which has more known Omicron cases than any other,
is likely to be the first to deliver answers to the questions
doctors and scientists have been grappling with since the World
Health Organization declared the new strain a "variant of concern"
a week ago. Key among those are whether Omicron makes those
infected sicker, whether it is more transmissible and in how far
current Covid-19 vaccines or a past infection protect against the
variant.
Andrew Cuomo Under Federal Investigation Over Sexual-Harassment
Allegations
The Justice Department opened a civil-rights investigation into
former New York Gov. Andrew Cuomo's executive chamber after a state
report found that he sexually harassed multiple women, people
familiar with the matter said.
Lawyers working for the U.S. Attorney for the Eastern District
of New York's Civil Division sent a letter to state officials
before Mr. Cuomo left office in August that said they were
examining employment policies in the executive chamber, according
to people who reviewed the letter. The executive chamber includes
the governor and his or her top aides and advisers.
U.S. to Lead Global Effort to Curb Authoritarians' Access to
Surveillance Tools
WASHINGTON-The U.S. plans to work with other countries to limit
exports of surveillance tools and other technologies that
authoritarian governments can use to suppress human rights, an
alleged practice in China.
The Biden administration said Thursday that it would launch an
initiative with friendly nations to establish a code of conduct for
coordinating export-licensing policies. The effort would also see
participating nations share information on sensitive technologies
used against political dissidents, journalists, foreign government
officials and human rights activists, administration officials
said.
Biden Administration Issues Cybersecurity Directives for Freight
and Passenger Rail
WASHINGTON-Nearly all U.S. freight and passenger rail systems
will be required to report certain cybersecurity incidents to the
Department of Homeland Security within 24 hours of discovery under
new directives published Thursday by the Biden administration.
The orders, issued under congressional authority given to the
Transportation Security Administration, will affect about 90% of
passenger rail systems in the U.S. and 80% of freight rail systems
that are considered "higher risk," a senior Department of Homeland
Security official said, meaning they are considered vital to
economic and national security.
Senate Approves Spending Bill Averting Government Shutdown
WASHINGTON-Congress passed a short-term extension of government
funding and sent the legislation to President Biden's desk,
averting a partial shutdown after resolving a standoff over vaccine
rules.
Top Republicans and Democrats reached an agreement on the
spending plan Thursday morning to extend funding through Feb. 18,
then quickly maneuvered the legislation through both the House and
Senate before the expiration of current funding at 12:01 a.m.
Saturday. The legislation also includes $7 billion for assisting
evacuees from Afghanistan.
Write to sarka.halas@wsj.com TODAY IN CANADA
Earnings:
Bank of Montreal 4Q
Canadian Western Bank 4Q
Economic Indicators (ET):
0815 Nov Official International Reserves
0830 Nov Estimates of production of principal field crops
0830 Nov Labour Force Survey
0830 3Q Labour productivity, hourly compensation & unit
labour cost
Stocks to Watch:
Canfor Pulp Products Announces Production Curtailments in
Response to Supply Chain Challenges; Pulp Shipments Have Declined
as a Result of Weather-Related Transportation Disruptions; Canfor
Plans Minimum 2-Week Curtailment of NBSK Production at Northwood
Pulp and a Minimum 4-Week Curtailment of Production of BCTMP at
Taylor Pulp
Expected Major Events for Friday
00:01/UK: Nov BRC-Sensormatic IQ Footfall Monitor
00:30/JPN: Nov Japan Services PMI
06:00/RUS: Nov Russian Services PMI
07:45/FRA: Oct Industrial production index
08:45/ITA: Nov Italy Services PMI
08:50/FRA: Nov France Services PMI
08:55/GER: Nov Germany Services PMI
09:30/UK: Nov CIPS / Markit Services PMI
09:30/UK: Nov UK Official Reserves
09:30/UK: 3Q Bank of England external business stats
13:15/CAN: Nov Official International Reserves
13:30/CAN: 3Q Labour productivity, hourly compensation &
unit labour cost
13:30/CAN: Nov November estimates of production of principal
field crops
13:30/CAN: Nov Labour Force Survey
13:30/US: Nov U.S. Employment Report
14:45/US: Nov US Services PMI
15:00/US: Nov ISM Report On Business Services PMI
15:00/US: Oct Manufacturers' Shipments, Inventories & Orders
(M3)
16:00/US: Nov Global Services PMI
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Friday
ASA Gold & Precious Metals Ltd (ASA) is expected to report
for 2Q.
Bank of Montreal (BMO,BMO.T) is expected to report $3.18 for
4Q.
Big Lots (BIG) is expected to report $-0.16 for 3Q.
Canadian Western Bank (CWB.T) is expected to report $0.83 for
4Q.
Esports Technologies Inc (EBET) is expected to report for
3Q.
Genesco (GCO) is expected to report for 3Q.
Hibbett Inc (HIBB) is expected to report $1.42 for 3Q.
Hugoton Royalty Trust (HGTXU) is expected to report for 3Q.
Outlook Therapeutics Inc (OTLK) is expected to report $-0.07 for
4Q.
Skillsoft Corp (SKIL) is expected to report for 3Q.
Unico American (UNAM) is expected to report for 3Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
BeyondSpring Cut to Hold From Buy by Jefferies
BeyondSpring Cut to Underperform From Buy by B of A
Securities
Choice Hotels Intl Cut to Hold From Buy by Loop Capital
Columbia Financial Raised to Overweight From Neutral by Piper
Sandler
CubeSmart Raised to Outperform From Market Perform by Raymond
James
Expeditors International Cut to Underweight From Equal-Weight by
Morgan Stanley
Ford Motor Cut to Peer Perform From Outperform by Wolfe
Research
Graco Raised to Outperform From Market Perform by William
Blair
Hibbett Sports Cut to Neutral From Buy by B of A Securities
Okta Raised to Overweight From Neutral by Piper Sandler
Public Storage Raised to Strong Buy From Outperform by Raymond
James
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
December 03, 2021 06:12 ET (11:12 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.