There were more signs that the "return to normal" for the global economy may take longer than hoped for in a couple of major layoff announcements. Walt Disney Co. made one of the deepest workforce reductions of the Covid-19 era after it announced yesterday it was firing 28,000 workers. Oil major Royal Dutch Shell also said it will cut as many as 9,000 jobs as it struggles with low demand and tries to restructure.  Despite those headline numbers – the ADP Payroll report is out -- Private companies added 749,000 jobs in September vs. the 600,000 Dow Jones estimate. (Bloomberg)

Big data firm Palantir and corporate software company Asana are the latest businesses to challenge the traditional IPO process by debuting on the New York Stock Exchange today in the form of a direct listing. Depending on how successful they are, more companies could choose to go public this way going forward, especially if they are allowed to raise new money as part of the process. Going public via direct listing tends to be a quicker route and involves less scrutiny, while super trendy SPAC mergers are also gaining prominence. The NYSE has set a reference point of $7.25/share for Palantir and $21/share for Asana, though the figure only acts as a placeholder in lieu of a formal IPO price. (SA)

Bend-based Les Schwab Tire Centers – which calls itself "the nation’s highest-ranked, most customer-focused tire retailer" – has reached an agreement to sell the company to investment firm Meritage Group, Les Schwab Chief Executive Officer Jack Cuniff said Tuesday.  While terms were not disclosed, when one of the most iconic Central Oregon-born companies and the region's third-largest private employer put itself up for sale late last year, analysts said a deal could fetch up to $3 billion. Meritages’ founder, Nat Simons, is the son of Jim Simons, the founder of Renaissance Technologies, the most successful hedge fund of all time.  (KTVZ)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.
 

Stocks rose sharply yesterday as Wall Street built on strong gains from the previous session amid hope for a new deal on U.S. fiscal stimulus and several corporate deals being struck. 

 
Investors also cheered a slew of corporate deal making activity. Devon Energy and WPX Energy announced they will move forward with a merger of equals, sending their stocks sharply higher. Meanwhile shares of the two mining companies Cleveland-Cliffs and ArcelorMittal shot higher after Cleveland-Cliffs agreed to buy ArcelorMittal’s U.S. operations for $1.4 billion. The deal, which is expected to close in the fourth quarter of 2020, will make Cleveland-Cliffs the largest flat-rolled steel producer in North America.
 
Amazon is aiming to kickstart the holiday shopping season early this year.  The company is holding its annual Prime Day over two days in October this year, after the pandemic forced it to postpone the sales event from July. It’s the first time Prime Day is being held in the fall, and Amazon is positioning it as a way to get people to start their holiday shopping. Even before Amazon’s announcement Monday, major retailers have said they plan to push shoppers to start their holiday shopping in October and offer deals earlier, hoping to avoid crowds in their stores in November and December.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones

The rapidly diminishing chances of a new fiscal stimulus package ahead of the election have not been completely extinguished yet. Speaker Nancy Pelosi said Democrats would unveil a new "proffer" shortly, adding that she would prefer the House majority to pass an actual deal than simply vote on a package that would be dead on arrival in the Senate. While there were some talks between Pelosi and Treasury Secretary Steven Mnuchin on Friday, the continuing deep divides on the size of any package and the very short timeline to the election means lawmakers remain skeptical a breakthrough is possible. (Bloomberg)

Devon Energy is in talks to acquire WPX Energy in an all-stock deal that could be completed as soon as this week. The proposed merger would create an entity with a combined current market value of ~$6B; Devon itself was worth more than $50B at its peak value in 2008. Both companies have substantial operations in the Delaware portion of the Permian Basin. Shares of WPX are up 14.8% this morning on the news.  (SA)

The original design for Nikola’s flagship truck was purchased by founder Trevor Milton from a designer in Croatia despite company claims in a 2018 lawsuit that the vehicle was initially designed by Mr Milton “in his basement”.  The latest twist comes with Nikola still reeling from accusations earlier this month that it passed off purchased technology as its own, covering supplier names on key components with stickers when making promotional videos. In a report that sent Nikola’s shares tanking, Mr Milton was accused of spreading an “ocean of lies” about the company’s technology and its products.  (FT)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Stocks were higher yesterday as tech shares recovered some of their recent losses while traders weighed the latest batch of economic data and news that Treasury Secretary Steven Mnuchin and  Nancy Pelosi both confirmed that they have agreed to restart stimulus negotiations that have been in a stalemate for nearly two months.

 
Sales of new U.S. single-family homes increased to their highest level in nearly 14 years in August, suggesting the housing market continued to gain momentum even as the economy’s recovery from the recession appears to be slowing. The Commerce Department said new home sales rose 4.8% to a seasonally adjusted annual rate of 1.01 million units last month, the highest level since September 2006.

And even thought Oregon’s economy is in shambles, the state’s jobless rate is 7.7% and more than 160,000 Oregonians are looking for work, nearly double the number unemployed a year ago, state tax revenues have continued growing, almost as if the pandemic never hit.  Oregon state economists called the counterintuitive results “shocking” when they released their quarterly revenue forecast. The state brought in $6.8 billion in personal income taxes from March through September, up 4.6% from the same six months of 2019 – a period when the state’s economy was in arguably its best shape ever.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.

Stocks fell sharply again yesterday, adding to September’s struggles, as tech shares took another leg lower and investors fretted over uncertainty around the coronavirus pandemic and further stimulus. 

Shares of Tesla fell over 10% after Elon Musk the company’s CEO offered new delivery predictions for 2020 and detailed a new battery design that he claims will make Tesla’s cars cheaper to produce. The stock was also under pressure after Tesla sued the U.S. government to overturn tariffs on China. 
 
American households are socking away large sums of cash amid economic uncertainties later this year as a new wave of COVID-19 and the post presidential election aftermath have Americans nervous about their financial future.  U.S. consumers built up an astounding $12.5 trillion in excess of savings from April through July, according to new research by Morgan Stanley. This equates to 13.5 months of the $600 a week supplemental unemployment insurance benefit that lapsed on July 31.  Cash hoards have been built across the income spectrum.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.
 

Stocks rose yesterday, recovering from the Monday’s steep sell-off, as Amazon led shares of Big Tech higher.
 
Investors also reacted to remarks by Federal Reserve Chairman Jerome Powell, who reiterated the central bank will support the economy “for as long as it takes.”  Powell added that, while the path forward “continues to be highly uncertain,” economic activity has “picked up.”
 
After a record-setting July, the housing market still shows no sign of cooling off.  Sales of existing homes rose 2.4% to a seasonally adjusted annualized rate of 6 million units, according to the National Association of Realtors. Sales were 10.5% higher compared with August 2019. This is the highest sales pace since December 2006, before the Great Recession.  Sales were hampered only by lack of supply. There were 1.49 million homes for sale at the end of August, down 18.6% annually to a 3-month supply. The number of homes for sale when sales were last this robust, in 2006, was more than double the current supply.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.

Stocks continued their September selloff yesterday as fears about the worsening coronavirus as well as uncertainty on further fiscal stimulus rattled traders.

 
Shares of the electric truck maker Nikola tanked more than 20% after announcing its founder is voluntarily resigning.  Earlier this month was accused of making false statements about Nikola’s technology in order to grow and secure partnerships with auto companies, including General Motors. GM announced earlier this month that they are taking an 11% stake in Nikola worth about $2 billion. Shares of GM lost more than 6%.
 
Shares of major bank stocks including JPMorgan Chase, HSBC and Deutsche Bank sold off sharply following a report that they and other financial institutions for decades facilitated fund transactions used for allegedly criminal activities, and failed to report suspicious activity.
 
The number of Oregonians who say they are worried, or very worried, about their personal financial situation has fallen by 14 points since March.  Fears spiked at the beginning of Oregon’s coronavirus shutdown, with 63% expressing worries about their own financial situation. That’s on par with the aftermath of the Great Recession.  Sentiments have sharply rebounded, though, and are now back to pre-pandemic levels.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.

This morning's initial jobless claims data came in at 860,000 – slightly better than expectations. Continuing claims came in at 12.7m, as signs grow that the early rapid recovery in the U.S. economy has slowed. Fed Chair Jerome Powell hit on this theme in his press conference yesterday, saying that "the path ahead remains highly uncertain" while he and Fed officials stressed the likely need for further fiscal stimulus. (Bloomberg)

Snowflake, the newest cloud computing company IPO doubled in value yesterday, giving it a market capitalization of more than $70B, well above the $12B it was valued at in February. Why so much excitement? Snowflake's data warehouse, which allows companies to analyze and manage multiple data sources, has massive revenue growth and caught on to the shift towards remote work as a result of the coronavirus pandemic. Following yesterday's wild session, Snowflake's Price/Sales ratio approached ~190x on a trailing twelve-month basis, and it is very richly valued compared to other cloud businesses. (SA)

Several airline executives are planning to meet White House officials today with only two weeks to go before a ban on industry job cuts is set to expire. Airline CEOs and labor unions want another $25B in federal aid to preserve sector jobs through the end of next March as a recovery in travel demand hasn't yet materialized. The proposal has won bipartisan support in Congress, and while lawmakers and the White House have yet to reach a deal on a new coronavirus package (that could include another round of relief), President Trump is pushing Republicans to back a bigger stimulus bill. (FT)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Apple investors and customers today will be watching the company's annual September iPhone event, which starts at 11am, but probably won't feature the iPhone at all. Calling it "Time Flies," Apple is likely to reveal its latest watch and an updated iPad, but delay its 5G phone.  There are also rumblings of a bundled subscription service called "Apple One" that would give users a discount and the ability to manage all their subscriptions in one place. Apple has enjoyed a strong 2020 rally, with shares up 54% on the year, though the stock has pulled back 16% from a Sept. 1 closing high due to a broad tech selloff. (SA)

There's no shortage of wild stuff happening in the market right now. The roller-coaster action in Tesla. Traders pouring money into the triple-leveraged Nasdaq 100 ETF at the fastest clip ever. The Nikola fraud saga.  But, one thing to watch here is just how solidly the back to normal trades are doing. Just yesterday, the S&P hotels index hit its highest level since early June, having surged over 4% yesterday, and industrials hit their highest level YTD. This is probably one of the charts to watch to see if conviction really starts taking hold among investors about the crisis coming to an end.

The International Energy Agency added its voice to warnings over future demand for oil in its monthly report this morning. It said the market has grown "even more fragile" as it cut its demand forecast for the fourth quarter by 600,000 barrels a day. Yesterday OPEC cut the consumption outlook for its products in 2021 by 1.1 million barrels a day. Trafigura Group, the world's second-largest oil trader, warned that the oil market is about to go back into surplus. (IEA)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Oracle Corp. emerged as the winner in negotiations to take over the U.S. operations of ByteDance Ltd.'s TikTok app, according to people familiar with the talks. The terms of the deal are still evolving, with the end option likely to be something closer to a corporate restructuring with Oracle taking a stake in a newly formed U.S. business. While the structure seems to be devised in order to meet recently tightened Chinese oversight rules, it is not clear whether it would pass muster with the administration, which has set tomorrow as the deadline for the sale or shutdown of TikTok's American operation. (Bloomberg)

Deals, deals, and more deals:  Nvidia Corp. agreed to buy SoftBank Group Corp.’s chip division Arm Ltd. for $40 billion in the semiconductor industry’s largest-ever deal. SoftBank will also raise 1.2 trillion yen ($10.4 billion) from selling about a third of its domestic wireless arm. Gilead Sciences Inc. agreed to acquire Immunomedics Inc., the maker of a promising breast-cancer therapy, for about $21 billion, or $88 a share, more than twice Friday's closing level. The hardy perennial of merger rumors is back again this morning, with reports suggesting the chairmen of UBS Group AG and Credit Suisse Group AG are exploring a potential combination. (SA)

Two of the largest US software listings in history will lead the biggest week for initial public offerings since Uber’s flotation last year, as companies cash in on the market’s hunger for technology stocks.  A dozen IPOs are set to raise $6.8bn, with half of the proceeds coming from three California tech listings, Snowflake, the cloud software business, will raise $2.2bn, and Unity, a video game software company, will raise $950m. Sumo Logic, another data software platform, will raise $281m. (FirstFT)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.
 

U.S. producer prices rose a bit more than expected in August as the cost of services increased solidly, while underlying producer inflation continued to firm.  The producer price index for final demand rose 0.3% last month after surging 0.6% in July.

The government said that 13.4 million people are continuing to receive traditional jobless benefits, up from 13.3 million the previous week. The increase suggests that hiring isn’t occurring quickly enough to offset still-widespread layoffs.  Hiring will likely remain restrained as long as Americans are unable or reluctant to resume their normal habits of shopping,  traveling, dining out and engaging in other commerce. The rate of reported infections has dropped over the past several weeks but remains well above where it was during the spring. Most analysts say the economy won’t likely be able to sustain a recovery until a vaccine is widely available.

The majority of Oregonians once again paid their rent on time in September, but the latest numbers from housing groups continued to show a worrying decline in the percentage of tenants paying their rent at the beginning of the month.  According to data compiled by RealPage, a company that provides property management software, 81% of renters in Oregon made full or partial rental payments by September 6.  Those numbers are down 11 percentage points from September 6 of last year when about 92% of renters in Oregon had made full or partial rental payments.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.

Stocks traded higher yesterday as tech shares clawed back some of their recent steep losses that knocked the S&P 500 and Nasdaq Composite back below their record highs.

 
Shares of Mastercard are up more than 2% after they said they are seeing “continued modest improvements” in its business in August. The company said its volume is now above its pre-pandemic levels outside of the travel and entertainment sectors and that business improved from July to August in every market outside the U.S.
 
Shares the jewelry maker Tiffany dropped more than 8% after Louis Vuitton owner LVMH said they were scrapping their acquisition of the jewelry company. LVMH said the deal couldn’t be completed “as it stands,” noting it needs to figure out the impact from potential U.S. tariffs on French goods.  Tiffany’s has filed a lawsuit to enforce the agreement.
 
Shares of the athletic retailer Lululemon are more than 8% lower despite their better-than-expected earnings and revenue for the second quarter.  The CEO said the retailer is “cautiously optimistic” about the rest of the year. Lululemon is not offering a 2020 outlook.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.

US Stocks continued their sell off yesterday to start the week as technology shares were under pressure following their worst sell-off in more than five months last week.  The Nasdaq Composite dropped 4% yesterday and is down more than 10% in the last 3 trading days.

Small-business owners confidence in the U.S. economy increased in August, outpacing expectations, according to data from a survey compiled by the National Federation of Independent Business.  The NFIB Small Business Optimism Index came in at 100.2 in August, a 1.4 points increase compared with July's reading and slightly above the historical 46-year average.

Shares of airline stocks are higher after data from the U.S. Transportation Security Administration (TSA) showed that 3.36 million people went through TSA checkpoints over the long Labor Day weekend. That compares with the 2.68 million people traveling over the long July 4th weekend, and the 1.21 million people that traveled over the Memorial Day weekend.

U.S. consumer borrowing rose in July for a second month, reflecting an increase in credit such as auto loans as the economy reopened more broadly and spending picked up.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.

US Stocks had their worst week since June last week with the NASDAQ suffering the biggest loss from a shift out of the big tech names into more cyclical value stocks. 

The Federal Aviation Administration is reviewing quality-control lapses at Boeing that could stretch back almost a decade.  The review piles onto the numerous regulatory issues Boeing has faced in the wake of two crashes involving its 737 Max planes that killed all 346 people onboard the two flights. Since then, Boeing has faced renewed scrutiny over its safety standards and manufacturing protocols as well as a deluge of questions from both regulators and lawmakers. Its 737 Max planes remain grounded.  Shares of Boeing are lower on the news.

Samsung Electronics won a $6.6 billion order to provide fifth-generation wireless solutions to Verizon Communications in the U.S., a big win for the electronics giant’s networking gear business.  The contract was finalized over the weekend and is valid through December 2025.  The deal marks one of Samsung’s biggest 5G contracts since Korea’s largest corporation decided years ago to invest in networking and compete with global players.

With Northwest Quadrant Wealth Management, I’m Tyler Simones.