Economic Data Deluge

Pre-markets indicate a mixed open at the start of this Hump Day trading, with the Dow looking up — partly on the strength of Nike’s NKE huge earnings beat Tuesday afternoon — the Nasdaq looking down — partly on Tesla’s TSLA “Battery Day” promises not living up to the hype — and S&P 500 somewhere in the middle. There are no immediate economic reads to parse this morning, so our viewpoint will be both backwards and forwards.

Nike doubled expectations in its fiscal Q1 earnings results, with pent-up demand and much stronger Digital Sales growth (+82%) propelled the stock, now up 15% from yesterday’s close. Tesla’s “Battery Day,” in which power innovations are trotted out to investors and analysts annually, demonstrated a continued “best in class” source of clean-power batteries but that may still be three years away. Shareholders were not happy to hear this. Tesla is down 3% ahead of the opening bell today.

Johnson & Johnson JNJ shares are up more than 2% this morning on the announcement it has begun its phase 3 trials for its Covid-19 vaccine candidate. This vaccine stands out not just due to its J&J brand (the drug has been developed by its Janssen Pharmaceuticals wing), but because it is a single dose administered, and with a phase 3 trial population including many people over the age of 60.

As we know, older people tend to have a tougher time recovering from Covid-19, although there have been serious cases and even deaths among young people, including some children. But hopes are high the J&J trials will bring a meaningful end to this coronavirus era over time.

Fed Chair Jay Powell appears back on Capitol Hill today, after a day in which he testified to a House committee that the U.S. economy has made improvements, but that more aid is “probably” necessary. Today, Powell is expected to have to defend the Fed’s decisions to fund bond markets, which a House subcommittee has deemed bad for Main Street.

In a document from the Hill released to the press, citations including over a million Americans were laid off from 500 companies in the secondary credit market while 383 of these companies paid out dividends to shareholders, including board executives. Further, 227 of these companies have since been accused of illegal conduct since 2017.

Thus, this particular backstop of the U.S. economy as a partial response to the coronavirus pandemic and subsequent economic shut-down is said to have benefited executives and investors, at the expense the general employee base. Powell will likely cite that the Fed’s actions have unlocked a trillion dollars in funding to the bond market, which would justify the body’s actions on behalf of the economy.

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