Stock Market Futures Edge Lower Ahead Of China Trade Policy Update
Stock market futures are edging lower on Monday morning as we kick start the first full week of October. The concerns about slowing growth and persistently high inflation continue to keep investors awake at night. Both Asian and European markets were mixed earlier today, with the debt crisis from China Evergrande (OTCMKTS: EGRNF) continuing to haunt investors. The trading of China Evergrande shares was halted in the Hong Kong stock market today. That was ahead of an announcement of a transaction, potentially a sale of part of its property services unit.
“The global chip and energy shortage is getting worse, the inflation is rising, the recovery may be slowing, and that puts central banks between a rock and a hard place … The best they could do is to do nothing, or to tighten their monetary policy to avoid losing control of the economy.”- Ipek Ozkardeskaya, a senior analyst at Swissquote
Meanwhile, investors are also keeping an eye on the potential unveiling of the Biden administration’s China trade policy. U.S. Trade Representative Katherine Tai will be speaking on the administration’s trade policy in a speech to a Washington think tank at 10 a.m. ET today. As of 7.06 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading lower by 0.30%, 0.36%, and 0.48% respectively.
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Tesla’s (TSLA) Deliveries Crushed Expectations Amid Global Chip Shortages
With the global shortage of semiconductor chips straining the production of electric vehicles, it’s natural that EV makers will report a lower number in their production. But that appears to have not much impact on Tesla (NASDAQ: TSLA). On Saturday, Tesla announced that it delivered 241,300 electric vehicles during the company’s third fiscal quarter. It’s a record number for the largest EV maker that not only topped analyst expectations. But it also suggested that Tesla weathered the chip shortage better than more established rivals.
For instance, major automakers including General Motors (NYSE: GM) and Toyota (NYSE: TM) said they had suffered sales decline due to semiconductor chip shortages. Tesla’s deliveries, on the other hand, rose 20% from the second quarter and 73% from the previous-year quarter. Though far outsold by more established companies, investors also need to watch the EV space closely as competition heats up.
The American electric truck maker Rivian, backed by Amazon (NASDAQ: AMZN) and Ford Motor (NYSE: F), is going public. And Lucid Group (NASDAQ: LCID) will soon deliver a luxury sedan capable of travelling up to 420 miles on a single charge by the end of this month. Considering all this competition, will an investment in TSLA stock be worth the risk in the stock market today? If you consider the factory expansion and the handling of the chip shortage, there are certainly reasons for optimism with Tesla stock.
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Facebook Whistleblower Said Company Prioritized Profit Over Public Good
A Facebook (NASDAQ: FB) whistleblower brought internal documents, research reports and online employee discussions detailing the company’s research to The Wall Street Journal. The whistleblower was revealed on ‘60 Minutes’ as Frances Haugen. The 37 year-old former Facebook product manager joined the company to protect against election interference on Facebook. According to Frances, Facebook’s lack of openness about its platforms’ potential for harm and unwillingness to address its flaws is putting people’s lives at risk. And as a last resort and at great personal risk, Frances decided to blow the whistle on Facebook.
The social media company has since been under fire after documents showed that Facebook was aware that Instagram has had negative impacts towards the mental health of young users. Haugen also shared new allegations about Facebook allegedly relaxing its standards on misinformation after the 2020 presidential elections. That was shortly ahead of the January 6 riots at the U.S. Capitol. It’s no secret that Facebook has faced public relations issues over the years. Investors may be keen to see how this latest development could affect FB stock. But if history is of any guide, any impact would likely be temporary.
“The thing I saw at Facebook over and over again was there were conflicts of interest between what was good for the public and what was good for Facebook, and Facebook over and over again chose to optimize for its own interests, like making more money,” Haugen told ‘60 Minutes’.
Merck’s Antiviral Pill Success Sparks Vaccine Stocks Selloff
Merck (NYSE: MRK) and Ridgeback Biotherapeutics have developed a drug that reduces the risk of hospitalizations or death by around 50%. The drug, molnupiravir, is administered orally and works by inhibiting the replication of the coronavirus inside the body. More importantly, data suggests that it is consistently effective in treating all variants of Covid. Merck said it would seek emergency use authorization (EUA) from the FDA as soon as possible.
“The news of the efficacy of this particular antiviral is obviously very good news … The company, when they briefed us last night, had mentioned that they will be submitting their data to the FDA imminently … The FDA will look at the data and in their usual, very efficient and effective way, will examine the data as quickly as they possibly can, and then it will be taken from there,”- Dr. Anthony Fauci said at a Covid briefing Friday.
Certainly, Merck’s news appears to be a positive development in the fight against the pandemic. But it fueled fears that COVID-19 vaccine sales will decline in the upcoming months. Following this announcement, shares of Moderna (NASDAQ: MRNA), Novavax (NASDAQ: NVAX), BioNTech (NASDAQ: BNTX) came under severe pressure on Friday’s trading. This shows that investors have decided to take some profit given the current elevated valuation levels of vaccine stocks.
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El Salvador Mines Bitcoin Using Energy From Volcanoes
El Salvador was the first country to adopt Bitcoin as a legal tender. Now, the country has just started mining the cryptocurrency using the energy from volcanoes. The country’s president Nayib Bukele has banked his political future on a nationwide Bitcoin experiment. He tweeted on early Friday morning on the country’s maiden voyage into volcano-powered bitcoin mining. Bukele then posted a photo displaying an account balance that showed his country successfully mined 0.00599179 Bitcoin. That equates to about $280.
The volcano-derived energy is one solution to address the environmental concerns that come in tandem with the production of Bitcoin. The tech-savvy 40 year-old president aims to use Bitcoin to transform his poverty-stricken country. What’s more, he could also leverage the adoption of cryptocurrency to tap on the unbanked population. Of course, it is unclear how the initiative would play out eventually. But the president remains firm with his decision to adopt Bitcoin as a legal tender.
