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Volunteers to Be Infected With Coronavirus in Vaccine-Effectiveness Trials in U.K. - The Wall Street Journal
Controversial ‘human challenge’ trial would require injecting healthy humans with virus to gauge effectiveness of vaccines
LONDONU.K. researchers plan to start infecting healthy volunteers with tightly controlled doses of the coronavirus in early 2021 in what they called a first-of-its-kind effort to more rapidly gauge the effectiveness of multiple vaccines against Covid-19.The plans for so-called human-challenge trials target 18- to 30-year-olds who have been free of Covid-19 symptoms and show no other risk factors such as heart disease or diabetes, said the researchers, led by infectious-disease experts at Imperial College London, who are overseeing the effort.The goal is to test how effective vaccines are in warding off infection and symptoms and to study in detail how participants immune systems respond. Plans are to start at a clinical site at Londons Royal Free Hospital, part of the state-funded National Health Service, and eventually expand the study to other sites nationwide, researchers said. Scientists around the globe for months have debated whether deliberately infecting healthy people with the virus that causes Covid-19 is too high risk and therefore unethical. Some researchers argue that the severity of the pandemic, including deaths and economic toll, justifies more-aggressive trial methods. But others say there are too many unknowns: Seemingly young, healthy people sometimes suffer extreme Covid symptoms, and there is no proven treatment for subjects who fall seriously ill. Whats more, rising infection rates mean a lot of potential test subjects already have the virus, so purposely injecting it into more people may not be needed. We must question whether direct challenge studies are necessary, says Stephen Griffin, an antiviral researcher and associate professor of medicine at the University of Leeds. The debate over inoculating humans with live, potent viruses has gone on for centuries. In a now-famous experiment in the late 1700s, British doctor Edward Jenner injected a child with the smallpox virus, then recorded details of the boys reaction. The U.K. researchers said Tuesday that independent ethics and health committees will first have to approve the study before volunteers are enrolled, and they will closely monitor every phase, from participant screening to injection, isolation and follow-up. The researchers also said they would seek approval from the U.K.s regulatory body responsible for the safety of medicines and medical devices. Initially, trial subjects will be quarantined and compensated for an expected period of two to 2½ weeks, the group of researchers said. Scientists plan to expose the volunteers initially with the smallest dose possible until they find a level that reliably causes infection. The virus will be injected as droplets through the nose. That first phase of the study doesnt involve a vaccine, scientists said. After the researchers better understand infection levels and participant responses, they will integrate vaccines to measure their effectiveness when volunteers encounter the virus. Backers of challenge trials say they are necessary in the pandemic to expedite approval and fine-tuning of vaccines and for better understanding of the disease. Vaccines normally can take eight to 10 years to develop. Covid-19 has spurred accelerated research and testing of experimental vaccines in a fraction of that time in bids to save lives and jump-start economies. Leading Covid-19 vaccine candidates have progressed into late-stage testing and could be available, if granted emergency authorization, as early as December, companies developing them have said. Researchers in the planned U.K. challenge trials said they havent identified which vaccine candidates they will use, and said the challenge study doesnt replace conventional vaccine clinical trials, which rely on participants to be naturally exposed to the virus. During the challenge trials, treatments, which will initially include the antiviral drug remdesivir, will be at the ready and administered most likely before the volunteers even show symptoms, in an effort to limit the risk of severe disease, Dr. Chris Chiu, the studys lead researcher from Imperial College, said in a media briefing Tuesday. Governments around the world are debating the timeline for offering Covid-19 vaccines to the public, as drugmakers speed up development. WSJs Daniela Hernandez explains the potential health risks linked to fast-tracking vaccines. Photo: Siphiwe Sibeko/AP A recent multicountry study funded by the World Health Organization found the drug didnt reduce the number of deaths from Covid-19 in hospitalized patients. But Dr. Chiu said the researchers believe the pre-symptomatic status of the challenge-study volunteers, together with their youth and strong physical condition, will make remdesivir a good pre-emptive treatment. The U.K. government said it has agreed to provide 33.6 million pounds, equivalent to $43.5 million, in funding, and is aiming to begin testing in January, with results possible by May 2021. The leading Covid-19 vaccines in development include one manufactured by Cambridge, Mass.,-based Moderna Inc. and another co-developed by Pfizer Inc. and BioNTech SE. Large U.S. trials for two other leading Covid-19 vaccines, from Johnson & Johnson and AstraZeneca PLCthe latter working in partnership with the University of Oxfordhave been paused while the companies and independent panels investigate unexplained illnesses among study subjects. Scientists and U.K. government officials expect that Oxford-sponsored late-stage trials of its vaccine candidatewhich was temporarily paused but has since resumedcould show results by the end of this year. If so, Oxford and AstraZeneca could seek emergency authorization for the shot through U.K. or European authorities. The Imperial College researchers and their partners said they have seen a large influx of volunteers for the challenge trials. Because participants will be in peak physical condition, many are expected to become infected with the coronavirus but show mild symptoms, or none at all. The scientists said the hope is to focus first on the healthiest segments of the population, expecting that their responses will guide researchers to the best vaccines and treatments for more-vulnerable groups. Write to Jenny Strasburg at [email protected] Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Intel Nears Deal to Sell NAND Memory Unit to SK Hynix - The Wall Street Journal
Deal with South Korean chip maker could be valued at around $10 billion
Intel Corp. is nearing a deal to sell a memory-chip unit to South Koreas SK Hynix Inc. for roughly $10 billion, in a move that would reorient the semiconductor giant away from an area of historical importance that has become increasingly challenged. The companies are discussing a deal that could be announced as soon as Monday, according to people familiar with the matter, assuming the talks dont fall apart at the last minute. Specifics of the transaction, including exactly what SK Hynix would be buying, couldnt be learned. ...
China’s Economy Is Almost Over Covid-19 - The Wall Street Journal
Third-quarter growth slightly missed economists’ estimates of around 5.3%. But China’s economy still has good momentum under the hood.
Investors shouldnt be too discouraged by Chinas underwhelming third-quarter growth. Behind the headline numbers, always of questionable relevance, Chinas economy still has good momentum.From here on, countercyclical policy support is likely to ebb, and Beijing will refocus on structural problemsmany of which have been exacerbated by the coronavirus shutdowns this spring and the political fallout abroad.Chinas economy grew 4.9% from a year earlier in the third quarter, slightly missing economists estimate of around 5.3%. The soft spots of the Chinese recovery remain what they have been since the economy bottomed out this spring: consumer spending and private investment. Yet both of these hardened noticeably last month. Private investment in fixed assets over the first nine months of 2020 was still down 1.5% compared with the same period of 2019, but that compares with minus 7.3% for the first six months. Meanwhile, there are signs that fiscal support is starting to top out. After an enormous jump in the second quarter, overall investment growth by state-controlled firms and in power infrastructure have both leveled off at around 4% and 18% year over year respectively. Significant net government-bond issuance in September means that the fiscal boost still has a few months to run, but with private-sector investment finally finding its feet, that is likely to ebb by early next year. The news from industry and consumers looks reasonable too. Households have yet to fully recover from damaging shutdowns this springholiday spending over Chinas Golden Week holiday in early October was cautiousbut retail sales are growing again. They rose 3.3% year over year in September, up from a 1.1% drop as recently as July. And the worrying gap between factory orders and output earlier in the year, which resulted in a big inventory surge, appears to be largely resolved. Chief among the remaining challenges are the external political environment and the damage done to Chinas banks by the huge expansion of loan forbearance and low-cost lending needed to keep businesses afloat during the dark days of early 2020. Chinas exports are still growing rapidly, but a significant proportion of that probably represents medical and work-from-home related productsdemand that may not be sustainable. Once the rest of the world is back on its feet, concerns about over-dependence on China are likely to become a structural headwind for exports again. The firefighting phase of Chinas economic recovery is almost over. Next year, Beijing will likely turn its attention back to managing financial risks in real estate and banks, and to fortifying Chinas long-term position in supply chains. Goosing growth after the coronavirus crisis may turn out to have been a straightforward task by comparison. With tensions running high, Washington and Beijing have pushed to decouple technology and trade. But American financial firms including JPMorgan and Goldman Sachs are doubling down on investing in China and expanding headcount. Photo Composite: Crystal Tai Write to Nathaniel Taplin at [email protected] Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
One of the World’s Toughest Coronavirus Lockdowns Eases in Melbourne—by a Hair - The Wall Street Journal
With daily infections down to single digits, Australia’s Victoria state is easing its harshest restrictions
MELBOURNE, AustraliaAfter more than 100 days under one of the lengthiest and most stringent lockdowns in the world, residents of Australias second-largest city are getting a hard-earned reprievebut the terms highlight the deep global divide over the need for lockdowns to combat the Covid-19 pandemic.Since July 9, residents of Melbourne have been forbidden to leave their homes except briefly for a handful of reasons, including exercise and shopping for food within a three-mile radius. Offices and retail outlets were mostly shut. Restaurants and cafes were open only for takeaway or delivery orders. A nightly curfew lifted only late last month.Now, with daily infections down to just two from a peak of more than 700 and three straight days of no coronavirus deaths, health authorities in the state of Victoria, which includes Melbourne, are easing the harshest restrictions, while keeping an overall lockdown tighter than those prevailing almost anywhere else in the world. Starting Monday, Melbournes five million residents will be able to travel up to 15 miles from home, and a two-hour time limit for exercising outdoors will be scrapped. By Nov. 1, retail and hospitality outlets including restaurants, cafes and hair salons will be able to reopen at restricted capacity. Weddings will be capped at 10 attendees, including the couple exchanging vows; funerals, at 20. With many small-business owners already at breaking point, Victorias state premier, Daniel Andrews, said the Nov. 1 target date could be brought forward if infection rates, measured by a rolling 14-day average of daily cases, decline faster than expected. But he didnt provide an update for industries such as construction, manufacturing and meat processing, many of which have been operating under capacity restrictions. The tough tactics underline the divergent approaches that countries continue to take in combating the virus as 2020 winds into its final weeks. Leaders in the U.S. and Europe are struggling with a renewed surge in coronavirus infections. But they are also struggling to balance those concerns with the economic and social dislocations caused by lockdowns. Many public-health officials now say broad lockdowns arent necessary, nor are they likely to be obeyed. In Australia, however, public-health officials are sticking with the aggressive, almost zero-tolerance approach to community transmission they have taken since the start of the pandemic. Even with the new easing, Mr. Andrews has emphasized Melbournes emergence from lockdown will remain cautious and gradual. These lockdowns have come with pain and damage and hurt, but the strategy is working, Mr. Andrews said during a televised news briefing Sunday. What it means is that as other parts of the world are going into a deadly winter, with lockdowns and restrictions that are heartbreaking, Victoria can now build a Covid-normal 2021, he said. Mr. Andrews invited direct comparison with the U.K., which had similar numbers of infections back in August when daily cases in Victoria peaked at 725. Today, as Victoria records two new cases, the U.K. hit 16,171, he said. And as we continue easing our restrictions, they are being forced to increase theirs. Melbournes restrictions came into effect after a breach in hotel quarantine protocols this summer sparked a second wave of infections when the rest of Australia was practically virus-free. Officials initially tried a more targeted series of block-by-block restrictions, but imposed the hard lockdown when they failed to contain the spread. As a result of the outbreak, Victoria now accounts for 816 of Australias 904 deaths and nearly three-quarters of its total cases, according to official statistics. The tough restrictions have slashed Melbournes infection rate, but they have also crippled a city routinely ranked among the worlds most livable. Business groups and political opponents have criticized the states response as unnecessarily onerous with a disproportionate impact on the economy and social well-being. There is no sound reason to continue the restrictions on business, especially with case numbers clearly on a downward trajectory, said Jennifer Westacott, chief executive of the Business Council of Australia. Simply being allowed to go for a haircut or outside a bit more when you have no job, no money and your business has failed is just not good enough. With Victoria accounting for about a quarter of Australias gross domestic product, the restrictions have dragged on the entire countrys economy, which is in recession for the first time in almost 30 years. And the Australian rules football grand final, the local equivalent to the Super Bowl, will be played next week outside Melbourne for the first time in its 123-year history. The lengthy restrictions have led to public frustration and fatigue, contributing to small and sporadic public protests and legal challenges from small-business owners over the validity of the lockdown. Health experts and medical associations have broadly supported the Victorian governments pandemic-control measures, but have highlighted the need to mitigate the serious mental-health implications triggered by the prolonged lockdown, and the associated job losses and social disconnection, especially among the youth and disadvantaged groups. Greg Hunt, the health minister in Australias conservative national government, said federal data showed a 31% increase in Victorians requiring mental-health support over the past two months, compared with a 15% increase nationally. The number of calls to mental-health support service Beyond Blue was 90% higher in Victoria than the rest of the country in August. The second wave, which led to the lockdown, has taken an extreme toll on the mental health of Victorians and their economic prospects, said Josh Frydenberg, Australias treasurer. An Oct. 14 survey by polling firm Roy Morgan showed the premiers approval rating remained robust at 59%, albeit down by 11 percentage points from five weeks earlier. STAY INFORMED Get a coronavirus briefing six days a week, and a weekly Health newsletter once the crisis abates: Sign up here. Mr. Andrews, who leads a center-left state Labor government, has insisted that tough measures are necessary to stave off a potentially worse third-wave of infections that would risk overrunning hospitals and forcing an even longer shutdown. He has said the infection-rate targets were based on supercomputer scenario modeling and in extensive consultation with public-health experts, and constantly weighed against the economic and social pain. Many of the restrictions are likely to remain in place for at least several more weeks. These are not easy decisions to make, there is a lot at stake, Mr. Andrews said Sunday. And if we do too much, too fast, then well be where none of us ever want to be againdoing this again, back where we were. Write to Philip Wen at [email protected] Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
This Holiday Crunch Starts Early With More Packages Than Means to Deliver Them - The Wall Street Journal
FedEx, UPS and smaller carriers turn away customers as they brace for surge of online orders
One holiday item that is already sold out: shipping capacity.Both FedEx Corp. FDX 0.62% and United Parcel Service Inc. UPS 0.23% have told some of their largest shippers that most of their capacity is already spoken for, and that any extra trailers with holiday orders will have to wait to be picked up, according to shipping consultants and retailers.There will be days within the holiday season where the industry will be over capacity, FedEx Chief Marketing Officer Brie Carere said in an interview. The outlook has sent retailers on the hunt for alternatives with little luck. Smaller carriers in the U.S. like LaserShip Inc. and DHL eCommerce Solutions said they booked up their capacity for the holidays months earlier than usual and arent taking new customers until next year. The final safety valve is the U.S. Postal Service, whose finances and network have been stretched during the coronavirus pandemic and could come under more pressure if shippers dump their overflow orders into the agencys network. Everybodys in the market looking for more capacity, said Tim Geiken, principal at Platinum Circle Partners LLC, a logistics consulting firm. With minimal exceptions, nobody is finding it. The capacity shortfall could average as much as seven million packages a day between Thanksgiving and Christmas, estimates ShipMatrix Inc., a software provider that crunches parcel shipping data. Satish Jindel, the firms president, estimates that total shipping capacity for the industry will be 79.1 million parcels a day during that period, with 86.3 million packages looking for space. Last year, total capacity was 65.3 million packages with 67.9 million looking for space. Consumers should be prepared for deliveries to take extra days no matter which carrier is delivering their parcels, Mr. Jindel said. The shortfall could be minimized, he added, if Amazon.com Inc.s delivery network adds more drivers or if the Postal Service delivers more packages on Sundays. The shipping crunch comes against an uneven retail backdrop. Consumer spending has picked up since the pandemic brought economic activity to a halt. But the rebound is being fueled largely by select sectors, including big-box retailers and home-improvement chains, while department stores and others that had to temporarily close continue to struggle. Overall spending remains below pre-pandemic levels and there are signs the economic recovery is losing steam. Carriers and their shippers spend months planning for the holiday season and hone their forecasts for the number of packages they expect to ship. The two sides decide items like weekly shipping forecasts and how many trailers the carriers may need to pick up from their loading docks each day. Any deviation from the estimate can result in higher rates per package or penalties to compensate the carrier for needing to marshal more resources. FedEx in recent years has held the line tighter in deciding to accept any additional volume to make sure its network isnt overwhelmed. UPS, UPS 0.23% meanwhile, has had more wiggle room to accept additional volume because of a recent buildup of major sorting hubs. In previous years, shippers could usually find space to ship if online sales blew through expectations, though it would come at a premium to rates that had been negotiated. It seemed like there was always a way where you could buy more capacity, said Hannah Testani, chief operating officer of Intelligent Audit, a freight audit and analytics company. Now, that doesnt exist. The primary reason for this years capacity shortage is that carriers already have been operating near maximum capacity for months as consumers stayed home, avoided stores and shopped online. The delivery surge has strained networks and led to longer processing and delivery times. Carriers cant quickly boost capacity with new facilities as it often requires a multiyear planning process. The carriers have imposed shipping limits on customers and added fees to offset the increased costs to staff up, secure protective equipment and other outlays during the pandemic. Pricing power has quickly shifted to the carriers, which are raising rates and being pickier about which shippers they want to do business with. To manufacture some extra capacity, carriers are asking their customers to make changes to try to move some shipping volume to times when there may be more slack in their network. For FedEx customers, that means doing more on weekends. The company, which has made a bigger push into e-commerce recently, has started doing pickups seven days a week, a process change it accelerated during the pandemic. It is telling customers that the network has more slack on Fridays, Saturdays and Sundays. We dont want to say no to anyone, FedExs Ms. Carere said. But, she added, There will be limits to certain days. The companys marketing for the holiday season will also focus on shopping for and shipping orders early, a company spokeswoman said. The delivery giants are also asking shippers for more detailed data on inbound volume and redirecting it to facilities that have the ability to handle it. We are working closely with our large and medium customers to steer volume to capacity and ensure the UPS network is reliable for all customers, a UPS spokesman said. A spokesman for the Postal Service said it is focused on handling the coming election mailing before turning attention to the holidays. The agency said its network can handle the expected increase in packages, but that it is especially important this year for customers to ship packages earlier. Our network is designed to handle temporary and seasonal increases in volume, and we have the ability to deliver those additional holiday packages in a timely manner, the spokesman said. SHARE YOUR THOUGHTS What lasting impact could the pandemic have on holiday shopping? Join the conversation below. One solution is to spread out sales more widely during the holiday season, a marketing strategy that the carriers are pushing their customers to pursue. Amazon.com Inc.s Prime Day and competing sales from other retailers kicked off the shopping season in mid-October, which can pull some of the shipping volume ahead of the busier windows. Meanwhile, retailers are trying to convince shoppers that they dont have to wait for the week of Thanksgiving to get the best deals. Many are also pushing services that allow customers to buy items online and pick them up in stores, an option that has surged in popularity during the pandemic. In most years, shippers would be able to rely on other carriers. But most have been turning away business far earlier than normal. DHL stopped taking on new customers at the beginning of August, as opposed to its normal schedule of waiting until October, a spokeswoman said. Josh Dinneen, chief commercial officer for Lasership, said the carrier, which serves the Eastern U.S., had to turn away shippers looking for help during the holidays as far back as July, as opposed to September in prior years. One shipper, after being told that Lasership wouldnt take their packages for November and December, replied with, Is there any amount of money that would change that? Its a great conversation to be having, Mr. Dinneen said. But I cant solve your problem this year because you came too late. Write to Paul Ziobro at [email protected] Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Tech’s Influence Over Markets Eclipses Dot-Com Bubble Peak - The Wall Street Journal
Companies that do everything from manufacturing phones to operating social-media platforms now account for nearly 40% of the S&P 500
Technology companies are set to end the year with their greatest share of the stock market ever, topping a dot-com era peak in the latest illustration of their growing influence on global consumers.Companies that do everything from manufacturing phones to operating social-media platforms now account for nearly 40% of the S&P 500, on pace to eclipse a record of 37% from 1999, according to a Dow Jones Market Data analysis of annual market-value data going back 30 years. Apple Inc., AAPL -1.40% which earlier this year became the first U.S. company to hit a $2 trillion market capitalization, accounts for more than 7% of the index on its own. Early last month, it accounted for 8% of the S&P, the largest share ever for any stock in data going back to 1998.S&P 500 share of total market value, by sector 40 % Technology* 30 Health care 20 Industrials and Materials 10 Utilities 0 Energy 2000 10 20 05 15 40 % Technology* 30 Health care 20 Industrials and Materials 10 Utilities 0 Energy 2000 10 20 05 15 40 % Technology* 30 Health care 20 Industrials and Materials 10 Utilities 0 Energy 2000 10 20 Despite a recent pullback in popular tech stocks like Apple and Netflix Inc., NFLX -2.06% many of these companies still number among the markets leaders for 2020, powering the S&P 500 to a nearly 8% gain for the year and keeping it near all-time highs during the coronavirus-induced economic slowdown. Tech stocks lifted markets early this past week before dragging them down later, highlighting their sway over the major stock indexes. Trends like remote work and cloud computing are driving growth at these firms, helping tech companies expand their businesses when many are struggling. Yet the concentration of gains in a narrow group of companies concerns many investors, who worry that stocks are too dependent on the sector and that a significant pullback in a few names could bring down markets. Previous peaks in a sectors influence over the S&P 500 have preceded selloffs. The tech sector tumbled after the dot-com bubble burst. Banks influence over markets peaked in 2006 ahead of the financial crisis, and energy stocks slid after hitting a new high in their share of the index in 2008. Few analysts say tech stocks are as overvalued as they were two decades ago, with sturdy earnings growth and near-zero interest rates justifying much of the groups recent ascent. But many investors are bracing for more volatility in a sector that has risen remarkably quickly and pulled the rest of the market along with it. Weve had a mandated digital lifestyle, said Alison Porter, a portfolio manager focused on the sector at Janus Henderson Investors. She remains confident in the biggest technology companies because of their reliable growth and prominence with people staying home during the pandemic. Investors this week will monitor the next round of third-quarter earnings from companies including Netflix, as well as the latest figures on weekly jobless claims to gauge the health of the economy. Because Congress hasnt passed additional stimulus measures, many traders remain hesitant to favor parts of the market that are more directly tied to economic growth. That also held true throughout the slow but sturdy expansion that ended earlier this year. While data show the tech giants employ fewer workers than some other previous market leaders, they do invest heavily in their businesses and allow other firms and consumers to buy and sell goods and services more efficiently. Howard Marks, co-founder of investment firm Oaktree Capital Group LLC, said in a recent memo to clients that measures of how expensive tech stocks are relative to current profits could actually understate the potential of these companies because they spend so much to drive their rapid growth. Analysts estimate the tech sectors share of S&P 500 corporate profits could reach about 36% this year, FactSet data show. The information-technology sector has a price/earnings ratio of 28 based on the groups profits from the past year, compared with a ratio of 24 for the S&P 500. Communication-services firms trade at 25 times earnings, while Apple, Microsoft Corp. , Facebook Inc. and Alphabet Inc. have valuations in the mid-30s. Netflixs ratio is about 90, while Amazon.com Inc.s is roughly 130. Even for more-expensive internet companies, many investors are willing to pay for their rapid growth. They have received an added boost over the last 10 years because the broad economic backdrop has been lackluster, said David Lebovitz, a global market strategist at J.P. Morgan Asset Management. He is recommending that clients favor companies within the sector that arent as expensive as the most popular internet stocks. At the same time, frenzied trading in the most popular internet companies remains a concern for many market watchers. Some of that activity has taken place in options tied to tech stocks. Options grant the holder the choice to buy or sell a stock at a certain price by a specified date. Banks and other firms that sell options to investors often then hedge against prices going up or down by trading tech investments themselves, a force that can exacerbate volatility. Japanese conglomerate SoftBank Group Corp. was a big buyer of tech-stock options earlier this year. The analysis of techs concentration in the S&P 500 is based on companies in the information-technology and communication-services sectors. Notably, that group excludes Amazon, the e-commerce giant that is in the consumer- discretionary sector. Including Amazon, which has a market value around $1.6 trillion, would make the tech sectors sway over markets even bigger. Because the S&P 500 is weighted by a companys market value, the biggest internet firms have overshadowed declines in several sectors this year. In another illustration of the groups strength during the pandemic, the S&P is outpacing a version of the index that gives every stock an equal weighting by nearly 10 percentage points this year, a gap that would be the highest since the late 1990s. The longer this backdrop continues, the further theyre going to pull away from the pack, said Amanda Agati, chief investment strategist at PNC Financial Services Group, which is favoring companies more tied to remote work and learning recently like technology, health-care and consumer-staples firms. SHARE YOUR THOUGHTS What does the future hold for tech stocks? Will their dominance on the stock market continue next year? Why or why not? Join the conversation below. Amazon and other large internet companies have come under increasing regulatory scrutiny in recent weeks, with a Democratic-led House of Representatives panel recently finding that Congress should consider forcing the tech giants to separate their dominant online platforms from other business lines. Few analysts expect the biggest tech firms to soon be broken up, and regulatory actions are often slow to play out, but many investors think regulation could be another source of volatility in the weeks ahead. The only thing that really makes me nervous as a tech bull is the likelihood of government intervention, said Jacob Walthour, chief executive of Blueprint Capital Advisors. Still, he recommends clients favor technology stocks, e-commerce companies like Amazon and electric-auto maker Tesla Inc. because of their growth potential. Write to Amrith Ramkumar at [email protected] Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
U.S.’s China Hawks Drive Hard-Line Policies After Trump Turns on Beijing - The Wall Street Journal
President’s election-year shift follows a trade deal, the coronavirus and Xi Jinping’s crackdown on Hong Kong
WASHINGTONSince President Trump was inaugurated, many members of his national security team have been itching to confront a China they view as the greatest threat to the U.S.For three years their biggest roadblock, say current and former officials, has been a president who didnt share their views and whose highest priority was negotiating a trade deal with Beijing.The National Security Council said, Give us your wish list of ways to f with China, said one former national security official, recalling the early days of the administration. Proposals, ranging from stronger relations with Taiwanwhich Beijing considers to be a breakaway provinceto halting the global advance of Chinese telecommunications companies, saw little meaningful action. No longer. Since March, Mr. Trump has approved a head-spinning series of actions to confront China. The U.S. has dispatched aircraft carriers to the South China Sea, blocked Chinas tech companies from getting advanced technology, increased arms sales to Taiwan, closed Chinas Houston consulate over alleged espionage and sought to ban popular Chinese apps from the U.S. market. Further moves are being considered, according to officials: monitoring Chinese state airlines employees suspected of supporting espionage in the U.S., going after alleged Chinese government-backed efforts to influence U.S. politics and business, and blacklisting more Chinese technology firms. With tensions running high, Washington and Beijing have pushed to decouple technology and trade. But American financial firms including JPMorgan and Goldman Sachs are doubling down on investing in China and expanding headcount. Photo Composite: Crystal Tai Three big changes account for the administrations shift, according to the current and former officials in Washington: After a limited trade deal with Beijing was secured in January, Mr. Trumps political calculations changed and he now sees a tougher China policy as good for his reelection campaign. Different and harder-line China advisers to the president came to prominence this year after the coronavirus pandemic emerged out of China. The Chinese governments assertive actions in Hong Kong and elsewhere incensed administration officials and Congress. The Chinese Communist Party really needs to think clearly about how individuals around the world will view their behavior, said Secretary of State Mike Pompeo, who has become Mr. Trumps leading adviser on China. SHARE YOUR THOUGHTS Should the U.S. maintain its current policy to confront China in the coming years? Join the conversation below. The new offensive has pushed relations between the two countries to their lowest point in decades, spooked investors and, according to Chinese officials and government advisers, confounded Chinas leaders. After years when the administration emphasized the personal relationship between Mr. Trump and Chinese leader Xi Jinping, U.S. officials now speak openly of Chinese leaders as heirs of Stalin who are engaged in a battle for global supremacy. So far, Chinas officials have kept their responses to the U.S. actions proportionate, for instance closing the U.S. Consulate in Chengdu when the Chinese Consulate in Houston was shut. The confrontation is unlikely to de-escalate, no matter who wins the presidential election. Mr. Trump has campaigned on acting tough with China. Advisers to Democratic candidate Joe Biden say they share the Trump administrations analysis of Chinas aggressiveness. Taiwan looms as a flashpoint, as does the continuing battle over cutting-edge technologies. In the first years of his administration, Mr. Trump often used disruptive, sharp-elbowed tactics in pursuit of his trade deal, ratcheting up tariffs for example. He also praised Mr. Xi and, the current and former officials say, played down Chinas threats on Hong Kong and human-rights problems to keep them from getting in the way of negotiations. Mr. Trumps senior advisers say there wasnt a specific meeting that made it clear he was going on the offensive. Rather his dissatisfaction mounted in the spring as the new coronavirus spread from China to the U.S., killing Americans, wrecking the economy and threatening his reelection, current and former officials say. He turned from commending China for mitigating the outbreak to blaming it for its spread, as his administration faced criticism for its handling of the pandemic. Chinese Foreign Ministry spokesman Zhao Lijians tweet in March of an unsubstantiated theory that U.S. soldiers may have brought the coronavirus to China enraged Trump more than anything else, said an administration official. Its been an evolution, said Commerce Secretary Wilbur Ross. There isnt one sort of big bang. Senior advisers pitched ideas to take on China in ways that would resonate with Mr. Trump, officials said. Hard-liners argued that a ban on the Chinese social media platforms TikTok and WeChat was justified not only because the data they collect on American users could be used by Beijing for spying, but also because Facebook,Twitter and many other U.S. internet companies cant operate in China. The U.S. was addressing issues of fairness or reciprocity in a relationship they see as favoring Beijing for too long, they said. That view hit home with Mr. Trump, who calls reciprocity the R word in China meetings. Mr. Trump also began leaning more on his national security advisers than his economic ones. White House officials long talked of two different camps on China during the trade negotiations. Globalists such as Treasury Secretary Steven Mnuchin urged a quick settlement of the trade fight. Nationalists such as Trade Representative Robert Lighthizer and White House trade adviser Peter Navarro wanted to batter China with tariffs. After the trade accord, the lineup changed. Mr. Lighthizer allied with Mr. Mnuchin to preserve the deal and had limited sway on national security. Theres a defense lane. Theres a broader security lane. Theres a cyber lane, Mr. Lighthizer told a think tank audience in July. If I try to get in all of those lanes then Im just going to get run over. Otherswho call themselves decouplers or hard-linerswant to punish China even if that puts the trade pact at risk. Their ranks include Mr. Pompeo, deputy national security adviser Matt Pottinger, Attorney General William Barr, Mr. Navarro and Mr. Ross, who once worked with the Treasury secretary to get a quick trade deal. Two Camps Trump administration officials say China policy is divided between hard-liners whose priority is to confront Beijing and those aiming to preserve a trade deal.
- Hard-linersMike Pompeo, secretary of state Matt Pottinger, deputy national security adviser William Barr, attorney general Peter Navarro, White House trade adviser Wilbur Ross, commerce secretary
- Deal-backersSteven Mnuchin, treasury secretary Robert Lighthizer, U.S. trade representative
U.S. Stocks Climb on Earnings Optimism - The Wall Street Journal
Investors are betting that the biggest businesses have turned a corner in the third quarter, and earnings have fallen less than previously anticipated
U.S. stocks climbed Monday, continuing last weeks gains as investors look ahead to a week that could bring the start of a turnaround for corporate earnings. The S&P 500 rose 0.9% in morning trading, lifted by gains in technology shares. The Nasdaq Composite jumped 1.6%. The Dow Jones Industrial Average added 0.4%, or about 115 points. The early gains are on track to extend last weeks rally, during which the benchmark S&P 500 index advanced 3.8%, its biggest weekly gain in three months. Driving part of the rally, some investors said, were signs that the November presidential election could have more of a decisive result than originally expected. Polls showed a growing lead for former Vice President Joe Biden over President Trump. This week, traders focus is likely to shift to the third-quarter earnings season. Investors are betting that the results will show corporate performance has turned a corner, helping lift stocks higher. With the economy continuing to slowly reopen, profits of large companies in the S&P 500 are now projected to drop 20% from a year earlier, an improvement from the 25% decline anticipated at the end of June. There is a big sense that [the third quarter] was a big quarter for growth in the U.S., said Kit Juckes, macro strategist at Société Générale. Its economically not as bad as our worst nightmare.
McDonald’s, Chipotle and Domino’s Are Feasting During Coronavirus While Your Neighborhood Restaurant Fasts - The Wall Street Journal
A health crisis is creating a divide in the restaurant world. Big, well-capitalized chains are thriving while small independents struggle to keep their kitchens open.
The coronavirus pandemic is splitting the restaurant industry in two. Big, well capitalized chains like Chipotle Mexican Grill Inc. and Dominos Pizza Inc. are gaining customers and adding stores while tens of thousands of local eateries go bust. Larger operators generally have the advantages of more capital, more leverage on lease terms, more physical space, more geographic flexibility and prior expertise with drive-throughs, carryout and delivery. A similarly uneven recovery is unfolding across the business world as big...
Morgan Stanley to Buy Eaton Vance for $7 Billion - The Wall Street Journal
Deal continues bank’s shift away from trading toward steadier, simpler businesses like money management
Morgan Stanley MS 0.70% said it is buying fund manager Eaton Vance Corp. EV 47.51% for $7 billion just days after completing its takeover of discount broker E*Trade Financial Corp., continuing the firms shift away from trading toward steadier, simpler businesses like money management. The deal would nearly double the assets that Morgan Stanley manages on behalf of pension funds, insurance companies and other clients, to $1.2 trillion, and add about $1.7 billion of annual revenue. Morgan Stanleys asset-management arm is the most profitable of the banks four divisions but also its smallest, and had been seen as too niche to compete with larger rivals. Boston-based Eaton Vance, founded in 1924, brings about $500 billion in assets and bulks up Morgan Stanleys undersized presence in bonds and sustainable investing. Morgan Stanley Chief Executive James Gorman said Eaton Vance executives approached his firm a few months ago and found a receptive buyer, but that the bank needed to complete its takeover of E*Trade first, which it did last week. Morgan Stanleys retail brokerage already is the largest distributor of Eaton Vance funds, Mr. Gorman said. And there are opportunities to take Eaton Vances funds, which are mostly sold in the U.S., abroad where Morgan Stanley is bigger. It was sort of obvious, Mr. Gorman said in an interview. If we didnt do this someone else would have. Eaton Vance shareholders will receive $56.50 a share in cash and stock, a roughly 40% premium to the fund managers closing price on Wednesday that is likely to raise Morgan Stanleys own investors eyebrows. Morgan Stanley has been seen as overpaying before, when it paid similarly large premiums to acquire E*Trade and, before that, a company called Solium that manages employees stock. A lot of people in January 2009 told me the premium [Morgan Stanley was paying] for [brokerage] Smith Barney was too high, Mr. Gorman said Thursday, referring to a takeover early in his tenure that is now widely seen as a home run. Of the Eaton Vance deal, he said: Its fully priced, but Im totally comfortable. The deal is expected to be completed in the second quarter of 2021. Write to Liz Hoffman at [email protected] Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8