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Coinbase co-founder and CEO Brian Armstrong speaking at TechCrunch Disrupt SF 2018. Steve Jennings | Getty Images for TechCrunch Cryptocurrency exchange Coinbase on Thursday filed to become a public company and revealed that its revenue more than doubled last year. According to the filing, Coinbase had net revenue of $1.14 billion in 2020, up from $483 million the previous year. The company also reported net income of $322 million for the year after posting a loss in 2019. The company said it has 43 million verified users as of the end of 2020, with 2.8 million making monthly transactions. Trading in bitcoin and ethereum made up 56% of users' trading volume, Coinbase said. The company will use a direct listing to offer its shares instead of a traditional initial public offering. A direct listing is an alternative to an IPO, and it involves investors and employees converting their ownership stakes into stock that's listed on an exchange. Founders have become increasingly disenchanted with the IPO process in recent years, leading to a boom in direct listings and special purpose acquisition vehicles. Streaming music giant Spotify also went public through a direct listing. The move comes amid a boom in cryptocurrencies broadly, with bitcoin in particular gaining more acceptance among mainstream companies and investors. Large companies including Square and Tesla have been buying bitcoin in recent months. Bitcoin was trading at just under $52,000 per coin on Thursday, according to coin metrics. The crypto asset had never traded above $20,000 prior to December. Coinbase's stock would trade on the Nasdaq.
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Rocket 3.1 launches from Kodiak, Alaska. Astra / John Kraus Rocket builder Astra is preparing to go public in the second quarter, taking on a crowded field of competitors while aiming for daily deliveries to space by 2025. CEO Chris Kemp spoke to CNBC this month about the company's plans for its upcoming cash infusion. Once Astra closes its merger with Holicity, a special purpose acquisition company, the venture expects it will have as much as $500 million in capital on hand. That includes a $30 million funding round, previously unreported by media, that the rocket builder closed prior to announcing its SPAC deal. Astra, based in Alameda, California, raised the smaller round to help it "go faster" while the merger awaits regulatory approval, with Holicity's sponsor Pendrell Corporation and existing investors such as Marc Benioff contributing. "We're actually building a space platform – in much the same way that when Amazon started, they weren't marketing themselves as a delivery truck company or a warehouse company," Kemp said. "We're really trying to solve the problem that our customers have, which is they want to put stuff in space quickly." Financial backing aside, Astra is entering a field packed with competitors. For starters, its 40-foot-tall rocket puts it in the sub-sector of small launch vehicles – a category of the space industry that analysts and executives estimate has in excess of 100 startups in various stages of development. All those ventures are looking to compete with the small rocket leader Rocket Lab. Astra's rocket is advertised as capable of carrying up to 100 kilograms to low Earth orbit, for as little as $2.5 million for a dedicated launch. Kemp expects that price point to drop as Astra accelerates to a weekly launch rate in 2023 and beyond. "The plan is fully funded to 2025 to get to daily space delivery," he said. It's a formidable goal. "You're talking about nearly a launch a day," said Ken Herbert, an analyst with Canaccord Genuity. "Is it possible theoretically? Yes. But, in basically four years, is one company going to be able to support that kind of schedule? It's ambitious – nobody's ever done it." "It doesn't mean it's impossible, but everything's got to go right, even COVID-19 aside," said Herbert. "And there are other factors in play – if you have an anomaly with any one of these launches than everything else is going to get [delayed]" The latest in space-themed SPAC offerings CEO Chris Kemp speaks via video conference from Astra's headquarters in Alameda, California. CNBC Astra became the latest private rocket builder to reach space for the first time in December, after its Rocket 3.2 vehicle launched from Alaska. Although the rocket did not reach orbit on that mission, Astra's leadership viewed the launch as clearing the final hurdles needed to begin commercial service later this year. Astra's board of directors includes Kemp, co-founder and chief technology officer Dr. Adam London, Advance executive Nomi Bergman and ACME venture capital partner Scott Stanford. Holicity chairman and CEO Craig McCaw is expected to join the board when the merge is complete. The SPAC merger values the rocket company at a $2.1 billion enterprise value. It will list on the Nasdaq under the ticker symbol ASTR when the deal closes. Shares of Holicity have climbed since the deal was announced on Feb. 2, up about 50% since then. The SPAC's stock has climbed as high as $22.47 a share, but slipped in the past week to trade closer to $16 a share. The company is one of the latest in a series of space ventures that have announced deals to go public through a SPAC in the past few months – alongside BlackSky, AST & Science, and Momentus in the past few months. Richard Branson's Virgin Galactic also went public through a deal with Chamath Palihapitiya's SPAC in 2019. A $30 million raise pre-SPAC The company's headquarters near the San Francisco Bay in California. Astra Astra expects to have as much as $500 million in cash proceeds after the deal. That sum includes $200 million from a "private investment in public equity" or PIPE fundraising round led by BlackRock. "We convinced BlackRock, and a whole bunch of other conservative long-only investors, that the economics when you start manufacturing small rockets at scale pretty much cancel out what you get with a giant rocket. You get the same economics when you start making hundreds of rockets every year out of a factory," Kemp said. As for the $30 million venture funding round that Astra closed prior to announcing the SPAC merger, that effort included a $10 million infusion from Holicity's sponsors. Marc Benioff, chairman and chief executive officer of Salesforce.com speaks during the grand opening ceremonies for the Salesforce Tower in San Francisco on May 22, 2018. David Paul Morris | Bloomberg | Getty Images Astra's investor presentation disclosed that the company has more than $150 million in contracted revenue from government and commercial customers to launch more than 100 spacecraft. The firm also boasts a $1.2 billion pipeline for future launches, although Kemp caveated that as "kind of squishy stuff" like memorandum of understanding (MOU) agreements. Kemp said Astra is "trying to build a 100-year plan" and last year was "running things lean" during the beginning of the pandemic to complete its rocket development testing. Astra Kemp and London, Astra's technology chief, are controlling shareholders in the company, together owning about 30% of the company. Both have super-voting shares, which vote 10-to-1 compared to common shares – a common practice for Silicon Valley companies. "Companies that are building long-term businesses and founders that are committed to a long-term vision or company don't let investors take over their company," Kemp said. "It didn't happen at Facebook or Google or Amazon, and I think these [are the kind of companies] we aspire to be like." Astra's material risks A close up view of Rocket 3.2's engines shortly after liftoff. Astra / John Kraus The company's risk factors, listed in its filings with the Securities and Exchange Commission, also give investors a sense of what challenges Astra may see as it works toward its goals. Astra highlighted that it has "not yet delivered customer satellites into orbit using any of our launch vehicles or rockets, and any setbacks we may experience during our first commercial launch planned for 2021 and other demonstration and commercial missions could have a material adverse effect on our business." The marketplace of launching small satellites is another key risk. Astra noted that, while it sees significant growth in the years ahead, the market "is still emerging" and "not well established." Noting that other companies are building small rockets, and Astra expects "to face intense competition." Lastly, regulatory delays outside of Astra's concern are another risk, as the company requires licenses from U.S. regulators like the Federal Aviation Administration for launches. "No company has yet conducted licensed launches at the annual rate we are targeting," Astra said. Scaling production Astra Astra laid out an aggressive timeline for scaling production and generating revenue, starting with its first commercial launch this summer. Kemp said Astra built four rockets last year and stood up three for launch attempts, although Rocket 3.0 was destroyed after an anomaly on the launchpad. Rocket 3.1 suffered a guidance system issue shortly after liftoff, crashing after the engines were shutdown. The company has a future expansion to complete with the SPAC capital, beginning with more investment in its rocket factory. Astra builds 95% of the rocket in-house from raw materials, and also developed its own software for everything from manufacturing to the launch systems. "We're going to automate the factory itself, so that we can get a consistent output of rockets," Kemp said. Astra forecasts that it will conduct three launches this year, netting $4 million in revenue. The company aims to begin launching at a monthly rate by the end of 2021 – forecasting 15 launches in 2022. That would effectively match the launch pace Rocket Lab, which has launched 97 satellites on 18 missions to date. The company is targeting a weekly launch rate in 2023, with 55 launches bringing in $206 million in revenue. Astra aims to triple that rate in 2024, with 165 launches and rockets going up twice a week – when the company also expects to turn cash-flow positive. By 2025, Astra aims to be launching almost daily and cross the billion-dollar revenue mark, forecasting $1.12 billion in launch revenue for that year. Building a space platform Astra But, as Kemp noted above, Astra wants to build more than just rockets. The company is working on a cylindrical, disc-shaped "modular spacecraft" so that customers can integrate satellite sensors and technology demonstrations directly into Astra's rocket. "Rockets are always going to be a cylinder, so [a disc is] the perfect form factor to put inside a cylinder, where you don't waste any volume in the rocket, and then you can stack them," Kemp said. The practice of "ridesharing" on launches has become common, as small satellites hitch a ride on big rockets to get into space for lower prices. But Kemp says it's a "nightmare" for those small satellites, as "they all get dumped off in the same place." "That's the current state of the industry, and it sucks," he said. "It's like putting a FedEx truck on a plane and flying it to New York and then driving it back to Los Angeles, and then driving the truck off a cliff." Instead, Kemp says Astra's modular spacecraft will allow the company to drop off individual satellites in specific orbits on the same launch. Astra forecast its modular spacecraft business will begin generating revenue in 2022, which it expects will climb to more than $300 million a year by 2025. A mobile launch service Astra The other differentiator Astra has from other small rocket builders is minimal and mobile infrastructure required for launches, which Kemp says will become a money-maker as a spaceport service. "Our entire system packs into four shipping containers, which we can put on a C-130 Hercules [aircraft], on a truck, on a ship – and we've done all of those things already," Kemp said. Astra's launch infrastructure requires five employees to unpack, who Kemp says can then prepare the rocket to launch in less than a week. For the Rocket 3.2 launch in December, Kemp noted that one of the five employees Astra had sent to Kodiak, Alaska tested positive for COVID-19. The company quarantined the original team in hotel rooms, chartered a plane and flew up five more people to launch the rocket. "All I need is a license from the FAA, we put a fence around a gravel pad, and we launch from there in five days with five people," Kemp said. The company plans to add spaceports all around the country, Kemp noted, and even in other countries that are U.S. allies. "There are 80 space agencies and 75 of them have no way to get to space," Kemp said. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
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Avishek Das | LightRocket | Getty Images Robinhood is recovering from weeks of customer backlash, and a public grilling by Congress over the GameStop controversy. Despite that, the trading app's user growth, brand recognition and valuation appear to be stronger than ever. Demand for Robinhood shares in private markets is surging. The start-up likely benefitted from headlines and mentions by politicians and celebrities. Meanwhile, the app gained 3 million users last month alone, according to estimates from JMP Securities. "From a brand recognition perspective, who doesn't know who Robinhood is?" Greg Martin, of Rainmaker Securities, told CNBC. "Despite some positive and negative press, everyone in the world knows who Robinhood is. They couldn't have better free advertising." Robinhood, the app that pioneered zero-commission trading, is still seen as the main gateway for young investors to access the markets. It is expected to go public in 2021 amid strong demand for fintech stocks such as Square, PayPal and Affirm. Bids for pre-IPO shares of Robinhood spiked during the GameStop mania last month, according to Rainmaker, which provides financing for shares of pre-IPO companies. Demand also rose after Robinhood CEO Vlad Tenev appeared in front of Congress last week, and it's the most bid-upon stock Rainmaker sees in the secondary market right now. The increased demand is one vote of confidence for Tenev as he navigates a public relations and regulatory crisis. Arrows pointing outwards To be sure, these bids are not guaranteed. But they tend to be a good proxy for investor interest in companies at a certain price. One of the most recent bids this week was for shares of Robinhood at $52 per share — up from around $15 in September. Private market valuations are often opaque. They are based by the value of equity someone invests as a percentage of the company and hard to calculate without knowledge of a startup's assets and outstanding shares. But based on that step-up in bid prices, one investor told CNBC that Robinhood's valuation could be as high as $40 billion — more than triple its last publicly disclosed number. "With the amount of capital they now have I expect the company will be the dominant brokerage going forward and I think the market will acknowledge that," Martin said. "The valuation could be very large in the very near future which bodes well for an IPO." Robinhood declined to comment on IPO timing and valuation. The Silicon Valley start-up found itself in the middle of a firestorm last month amid the short squeeze in GameStop, which was partially driven by Reddit-obsessed retail investors. At the height of GameStop's rise, the millennial-favored trading app restricted trading of certain securities due to increased capital requirements from Robinhood's clearing houses. Demand from Silicon Valley Robinhood's decision to restrict trading was met with outrage from traders online. Still, its private investors flocked to back the company. Some venture capitalists responsible for the $3.4 billion in emergency capital cited the app's ability to add more customers amid the trading turmoil. Three of Robinhood's private investors said there was "strong demand" to get a piece of the company, even as it stared down a public relations and regulatory crisis. The financing came in the form of convertible debt, sources said. That will convert to equity when brokerage goes public, and those investors will get a 30% discount to the market price. One venture capitalist told CNBC that he and fellow investors believed the company was going to IPO relatively soon, and the debt round was a chance to "get in at a discount." JMP Securities' Devin Ryan estimates that Robinood's total accounts are now closer to 23 million, including the 3 million gained in January and 10 million users added in 2020 as investing from home boomed during the pandemic. In the Congressional hearing last week, Robinhood CEO Vlad Tenev said the company had delivered more than $35 billion of realized gains to investors, which implies big growth in customers and customer assets. Its average account size is about $5,000, the company said. Vlad Tenev, Robinhood Source: Robinhood Tenev, who co-founded Robinhood eight years ago, answered questions from members of the House Financial Services Committee for more than five hours last Thursday. The Robinhood chief was tempered in his responses, and calmly explained the billions in cash injections were to prevent a liquidity crisis from happening. One investor, who asked not to be named because company strategy was private, said Tenev's testimony "went well" despite being "painful to watch at times," due to varying degrees of understanding of Robinhood's business model from those in Washington. "Robinhood emerged from this — there certainly was a hit on the company but we're fully committed to working through that." Another investor told CNBC that generally, Robinood backers "are feeling pretty good" about Tenev's performance. After 48 hours of the GameStop saga, he said it was clear the Twitter backlash was "insular" as the company continued to add hundreds of thousands of new accounts that week. "Growth has been great, despite Robinhood taking the brunt of press and questions from Congress —Vlad's done a great job, and as good as he could have done given the situation," he said. "He was sitting at the nexus of potentially pissing off regulators, customers and competitors." Some analysts expect new regulation could hinder the legal, but controversial, practice of payment for order flow, hurting the IPO's prospects. However, Robinhood investors say its value lies in user engagement, not the revenue model. Investors pointed to its position at the top of the app store, even as it was restricting customers from trading certain stocks. "It's the fastest growing consumer app, and has better engagement than social media," another investor told CNBC. "The majority of those new traders won't be trading GameStop." Robinhood users ... investing in Robinhood? Some critics, most notably Barstool CEO Dave Portnoy, believe Robinhood's brand, built on democratizing investing, won't survive the GameStop trading halts. However, many expect retail demand for Robinhood's offering to be strong, given its the vehicle that lets rookie investors access the stock market with little friction. Robinhood could hit the public markets by way of a direct listing or through a special-purpose acquisition company, people familiar with the private dealings told Bloomberg News. It has also reportedly considered allowing investors on its platform to invest directly in the Robinhood IPO. Airbnb followed a similar playbook by offering shares to their hosts, and the stock traded up on the IPO because of retail participation. Snowflake was another IPO that surged on its first day, which some speculate was due to people discounting retail thirst for the name. With a public debut in mind, Robinhood is now talking about the future of the investing boom it helped spark. Some analysts have floated the idea of Robinhood's ability to launch more banking products, or even mortgages on the millennial-focused app. The future, according to Tenev, may also involve more brokerage firms merging stock trading and social media on the same platform, he told Andrew Ross Sorkin at the Dealbook DC Policy conference this week. Brokerage firms SoFi and Public already offer this feature. As for what happened with GameStop, Tenev called it a "5-sigma" event — meaning about a 1 in 3.5 million chance of occurring. Robinhood should have enough capital now to deal with regulatory requirements associated with frenzied trading, he said. But the GameStop volatility doesn't seem to be going away. Investors poured back into the brick-and-mortar retailer Wednesday, sending shares up more than 100%. — with reporting from CNBC's Crystal Mercedes.
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Jakub Porzycki/NurPhoto via Getty Images Shares of GameStop climbed 44% in premarket trade on Thursday as heavily-shorted stocks favored by Reddit traders look set for a resurgence. Investors piled into the bricks-and-mortar video game retailer on Wednesday following the reported ousting of Chief Financial Officer Jim Bell, sending the stock soaring 103.9% before trading was halted. The company announced Tuesday that Bell will resign on March 26, with reports suggesting that Ryan Cohen – GameStop investor and co-founder of online pet food retailer Chewy -- and the board forced the move in order to accelerate its transition online. GameStop was at the center of a period of market mayhem in late January as retail traders led by multi-million-member Reddit thread WallStreetBets sent its share price skyrocketing, causing a short-squeeze on a number of Wall Street hedge funds with bets on its decline. However, some analysts have suggested that there was also some institutional involvement in the ballooning share price. Another stock caught up in the retail frenzy, AMC Entertainment, was up 17% in premarket trade on Thursday, having climbed 18% during the previous session. The cinema chain has been bolstered by New York Governor Andrew Cuomo announcing that movie theaters in the city could open with limited capacity next month. Meanwhile, headphone manufacturer and fellow Reddit favorite Koss Corp jumped 57% in the early hours of Thursday.
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A GameStop store is pictured in New York, January 29, 2021. Carlo AllegriI | Reuters Shares of GameStop surged more than 100% on Wednesday as investors poured into the brick-and-mortar retailer amid a C-suite shake-up. Shares were halted with less than 30 minutes left in the trading day and the stock ended the day up 103.9%. Arrows pointing outwards GameStop announced Tuesday that its chief financial officer Jim Bell will resign on March 26. "Mr. Bell's resignation was not because of any disagreement with the Company on any matter relating to the Company's operations, policies or practices, including accounting principles and practices," the company said in a filing with the Securities and Exchange Commission. Sources familiar with the matter told Business Insider that Bell did not leave willingly, but was pushed out by Ryan Cohen, co-founder of Chewy who made an investment in GameStop last year in an effort to help the company accelerate its push online. Bloomberg News reported on Tuesday evening that GameStop's board pushed Bell out in order to execute its turnaround more quickly, according to sources familiar with the matter. Cohen appointment to the GameStop board helped drive the heavily shorted stock upward in January, which resulted in the epic short squeeze in GameStop that provoked retail trading mania and eventually attention from Congress. "We acknowledge that leadership changes often follow activist settlements and Mr. Bell's exit was mutual, non-immediate, and suggests no disagreements with company/board," Jefferies equity analyst Stephanie Wissink told clients. "We believe Mr. Bell deserves recognition for a series of actions that protected GME equity during the late stages of the last hardware cycle, when sales were down sharply." Jefferies added that GameStop will likely look for a CFO replacement with a tech, compared to retail, background, as GameStop focuses on e-commerce growth. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
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Jakub Porzycki | NurPhoto | Getty Images GameStop stock has defied gravity in the past and it could again, but there are some signs its stock may be topping out, some strategists say. GameStop was down sharply Monday, off more than 30% at $225. It has been the poster child of a group of stocks shorted by hedge funds but snapped up by small investors who helped drive share prices higher. The price rises even more when hedge funds are forced to buy the stock to cover short positions. GameStop has had a wild ride. It surged to an all time high of $483 last week but appeared to run out of steam Monday, falling well below its Friday close of $325. The stock closed at $17.25 on Jan. 4, the first trading day of 2021. Arrows pointing outwards 1. Call options cost trends When viewing a stock that's had a long speculative run, it's important to look at the call options on the stock when it stops moving higher, said Julian Emanuel, chief equity and derivatives strategist at BTIG. Call options, which allow but don't require investors to buy at a certain price, are basically bets the stock will continue to rise. Aggressive buying in those options can help speculative stocks go even higher until the options themselves become too expensive. "The high price of the options themselves are likely to cause the stock to top and then sell-off or at least go sideways and ultimately sell off as the speculative mania moves on to different areas," said Emanuel. "We're seeing this today in silver." Silver has been the target of aggressive buying and has also caught the interest of traders in the Reddit forum WallStreetBets. iShares Silver Trust ETF jumped 7.1% Monday and call buying continued to surge at record levels in the ETF. Retail investors have been very active in options, opening and closing positions in the same day in many speculative stocks. As for GameStop, Emanuel said the calls appear to have become too expensive to remain a source of further upside for the stock. For instance, the at-the-money Feb. 19 call options — that is, an option with a strike price that's identical to the company's current share price — in GameStop at Friday's close cost about 50% of the company's actual share price, Emanuel said. To give that perspective, the S&P 500 Feb. 19 at-the-money options cost just 2.5% of the S&P's value. "It's difficult to maintain a level of speculative interest when it becomes too expensive to buy call options," said Emanuel. 2. Reduced demand Two other factors depressing the stock are the reduction in short interest as investors were forced to cover shorts, and that brokers have restricted buying in GameStop, Emanuel added. That takes away an important source of demand, and speculative investors become less interested, he said. "It seems the Reddit army is moving into a different area," said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. "The stock is going down and the volatility goes down." "Usually when a stock goes down, volatility goes up," he said. "In this instance, as people leave and move into other areas, you're going to see the stock price and volatility go down." The 30-day implied volatility in GameStop options on Friday was 430% but it declined to 375% and continues to fall, Murphy said. Implied volatility measures the expected swing in a stock's price. That means investors are now expecting a move as big as 23% in the stock in one day in either direction, down from 27% on Friday. Of course, GameStop has also been affected by trading restrictions. Robinhood and other online brokers last week limited buying in GameStop, but allowed investors to sell. Brokers raised margin requirements on GameStop and some other stocks. It's very hard to tell whether GameStop was near a top because of restrictions on the stock, said Steve Massocca, managing director with Wedbush Securities. "When you tell people they can't buy but can only sell, of course it usually goes in one direction," he said. Robinhood on Monday continued to prohibit clients who own more than 20 shares of GameStop from buying any new shares.
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Getty Images Global travel screeched to a halt during the pandemic, and it's hurting credit card companies' bottom line.  American Express, Mastercard and Visa all reported double-digit drops in profit for the recent quarter, compared to a year ago. The companies pointed to a plunge in international travel as borders remain closed during the pandemic.  The companies earn a fee off of every transaction that runs on their network, while American Express also makes a significant portion of revenue from annual fees. A lack of cross-border payments is especially painful as those card swipes have higher margins, and end up being more lucrative. Visa was the latest major card company to report results on Wednesday. Cross-border transactions fell 29%, while Visa's revenue in the quarter was down 17% from a year ago. The company did not give guidance based on uncertainty around the virus, but said the cross-border weakness remains a "significant and continued drag on revenue growth." That will likely continue into 2021, according to Visa's CFO Vasant Prabhu.  "The cross-border recovery has been sluggish since borders remain closed, and there are significant impediments of crossing borders like quarantines and other such restrictions," Prabhu said on a call with analysts Wednesday.  Prabhu cited "significant uncertainties" including the impact of spikes in Covid infections happening in the U.S. and Europe, the timing of reopening of borders, the impact of therapeutics and a vaccine, additional stimulus programs and the economic impact once stimulus programs end. Covid cases in Europe spurred leaders of Germany and France to announce new economic restrictions for the next month, while new cases in the U.S. have hit record highs in recent weeks. Visa rival Mastercard reported earnings Wednesday, with many of the same themes. Mastercard's net income fell 28% year over year, and net revenue fell 14%, missing analysts' expectations. The company reported a 36% drop in cross-border volumes, and did not forecast a rebound in travel spending anytime soon.  "While we believe that cross-border will ultimately recover, it will take time for people to build their confidence in the safety of travel," Mastercard's chief financial officer, Sachin Mehra, said on a call with analysts Wednesday. "We believe that is tied to the broad availability of vaccines and therapeutics, likely towards the latter part of next year." Shares of Mastercard have fared the worst in the past week, and are down 11% this week. Visa and American Express are down 8% and 10% this week, respectively. Arrows pointing outwards Amex kicked off the card earnings on Friday with a 40% drop in profit from a year earlier. Travel and entertainment spending was down 69% year over year. While the company is "highly confident" that travel demand will return, "it will take a while," American Express CFO Jeffrey Campbell told CNBC in a phone interview.  "The human urge to travel is insatiable, but it will take some time to come back, just like it did after September 11th," said Campbell, who is also a former American Airlines chief financial officer. "For our company to be back at its pre-pandemic levels of earnings, we do need consumer travel to come back -- we're highly confident and in the meantime we're trying to take the right steps to rebuild growth and momentum." Business travel -- which makes up about 6% of the American Express's revenue -- could take "years to come back," Campbell said. Despite the travel-related slump, there were a few bright spots for the companies. Mastercard CEO Ajay Banga pointed to improvement in domestic travel in the quarter, including spending on lodging and sports. The card companies pointed to a rebound in domestic spending and an uptick in e-commerce that helped offset losses elsewhere. Payment volume for Visa rose 4%, while gross dollar volume, the dollar value of transactions processed, rose 1% at Mastercard. 
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Property data and analytics firm CoreLogic has received multiple potential takeover bids that value the company at north of $80 a share, sources tell CNBC's David Faber. The multiple parties interested in pursuing a deal with CoreLogic include private equity firms, Faber reported citing sources familiar with the talks. The company has already signed a non-disclosure agreement with at least one potential buyer, the people said. CoreLogic confirm later on Wednesday that it is "engaging with third parties indicating preliminary interest based on public information in the potential acquisition of the Company at a value at or above $80 per share." "No decision has been made to enter into a transaction at this time, and the Company can offer no assurance that it will enter into any transaction in the future or, if entered into, what the terms of any such transaction would be," the company added in its statement. Shares were last seen up 11.5%, around $76 a share, following news of the takeover bids. CoStar Group could be one of the potential bidders. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
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Jim Cramer Scott Mlyn | CNBC CNBC's Jim Cramer said Wednesday that a lack of coronavirus stimulus is making it hard for investors to buy stocks into a worsening of the United States' Covid-19 outbreak. "It's very hard to buy a lot of stocks when you see these numbers," Cramer said on "Squawk Box," as U.S. stocks were headed to steep declines Wednesday. Dow futures were down over 600 points. "And it's shame too because with stimulus, we'd be very tempted to own some of these stocks," added Cramer. "But right now, I think everyone is just fearful." Stocks also were falling Wednesday in Europe, as multiple nations there experienced increasing coronavirus cases and leaders such as German Chancellor Angela Merkel called for tougher business restrictions to try slowing spread. The pan-European Stoxx 600 was sliding over 2.5%. U.S. investors were surely monitoring the situation in Europe, Cramer said, likely influencing the negative sentiment for Wall Street. The "Mad Money" host worried, however, about the implications of more strict public-health measures in America without more fiscal support from Washington, where Democrats and the Trump administration have been locked in a stalemate on stimulus negotiations for months. "The lockdowns without the stimulus equals what we're seeing, and I think it's a shame because had there been stimulus, we would then be focusing on earnings and the earnings are actually pretty darn good," he said.
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Hari Moorthy, Goldman Sachs global head of transaction banking. Source: Goldman Sachs Goldman Sachs wants to help any company in the world become a bank. The firm has just released software that allows clients to embed banking services into their own products as part of a push to break into the $32 billion a year industry managing cash for big corporations, according to Hari Moorthy, Goldman's global head of transaction banking. Decades late to the global cash management industry ruled by Citigroup and JPMorgan Chase, Goldman hopes to leapfrog rivals by offering a fresh approach to corporate bank accounts and cross-border payments. After building a new cloud-based system for accounts and payments, Goldman is publicly releasing software known as APIs to allow clients' programmers to build on top of the bank's platform. "We are trying to create a new industry by integrating our services into their businesses so they can cater to their clients as if we had them," Moorthy said in a phone interview. "Imagine a technology company that can use these APIs to create a solution for payments or deposits in concert with whatever else they currently provide to that client." The approach, dubbed banking-as-a-service, is inspired by what Amazon has accomplished with its cloud business. Just as Amazon enabled a generation of businesses to tap into cheap computing power, Goldman's wager could theoretically spur the proliferation of digital wallets and seamless payments throughout the corporate and consumer realms. Arrows pointing outwards Source: Goldman Sachs "This is the financial cloud for corporates," Moorthy said. "The possibilities of what we could do here are practically limitless." The strategy could help Goldman jumpstart its push into transaction banking, an area which has lagged consumer technology in ease of use but where clients are slow to switch providers. The move is part of CEO David Solomon's broader expansion into corporate and consumer banking, steady businesses that will broaden the firm's revenue base away from volatile trading and investment banking. "There's this butterfly effect that will kick in after we roll this out," Moorthy said. "It allows us to acquire clients of our clients, allows us to seamlessly be integrated in the fabric of banking and corporates." By connecting directly into Goldman's corporate platform, clients can open accounts quickly and take advantage of the bank's automated payments programs, which it created for itself as its first client. The transaction banking effort, which officially launched in June to outside clients, has garnered $28 billion in deposits and more than 200 clients so far. Moorthy rejoined Goldman Sachs in 2018 to lead the nascent effort after spending almost four years at JPMorgan. The ten biggest players reaped $32 billion in revenue from transaction banking last year, led by Citigroup, Bank of America and JPMorgan, according to institutional research firm Coalition.
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A man walks a dog in the shade away from the midday sun past the New York Stock Exchange (NYSE) building in Manhattan, during hot weather in New York City, New York, U.S., August 11, 2020. Mike Segar | Reuters Dividends and buybacks are bouncing back.  At the end of the first quarter, there was tremendous concern that the levels of dividends and buybacks would be cut dramatically.  There have been cutbacks, but there's good news amid the bad. The good and bad news on dividends For lovers of dividends, the end of the first quarter and the start of the second quarter looked pretty dire.  Forty-two companies in the S&P 500 — nearly 10% — completely suspended their dividends, and 25 reduced them, in some cases considerably. "That was unprecedented," Howard Silverblatt from S&P Dow Jones Indices told me. "No company suspended their dividend in 2018 or 2019." But as the economy reopened, things began to turn around. Five of the 42 companies who suspended their dividends reinstated their dividend, at least partially. Even as some companies reinstated dividends, many more continued with what they had been doing for years: increasing dividends. A total of 216 companies have increased their dividends this year. The bottom line: Silverblatt estimates that the S&P 500 will pay out $479.1 billion in dividends in 2020, only 1.3% below the $485.5 billion paid out in 2019, which was a record year. The bad news: The S&P is yielding only 1.6%, one of the lowest dividend yields in decades.  Buybacks bouncing back from Q2 lows, but companies issuing much more stock The second quarter started out poorly, as companies sought to preserve liquidity by cutting back buybacks— big time. How big? Companies in the S&P 500 bought back $199 billion of their own stock in the first quarter. In the second quarter that figure dropped to $89 billion, a bigger than 50% reduction, according to data supplied by Goldman Sachs. But then, a funny thing happened. Just like earnings, which bottomed in the second quarter, buybacks also bottomed. In the third quarter, Goldman estimates, $112 billion was bought back, a 26% increase from the second quarter, and Goldman estimates $125 billion will be bought back in the fourth quarter. That's the good news. The bad news: while gross buybacks are climbing, companies are also issuing a lot more new shares, according to Brian Reynolds, who tracks buybacks at Reynolds Strategy. The result:  net buybacks — how much buybacks are increasing or decreasing overall share count — was flat in the second quarter and likely will also be flat for the rest of the year: "The average company reported a share count increase this quarter of 0.1%, compared to a share count decrease of 0.6% a year ago," Reynolds said in a recent note. An increase in the share count means that corporations can't rely on buybacks to boost their earnings.  Reynolds noted that the S&P Buyback Index, which consists of the 100 companies in the S&P that are buying back their stock most aggressively, had also shifted from reducing to increasing their share counts. The top holdings in the index include MGM, Best Buy, Qualcomm, Kansas City Southern, Lennar, Cummins, and Xerox. "A year ago, less than 20% of this group of companies were growing their share count. Now, 44% of them are. That is a striking shift," he said.  What's all this mean for investors? The S&P Buyback Index has underperformed this year, as investors dumped companies that had high levels of buybacks in 2019 for other parts of the market. Reynolds concludes that it may be time for those companies that can still aggressively buy back stock to outperform: "From a momentum standpoint, it appears that the stocks of companies who are still able to buy back their shares are approaching the point where we would want to buy them on weakness." Speaking of increasing buybacks: after the close, Microsoft announced that it had increased its buybacks in the third quarter dramatically, to $6.74 billion, from $5.8 billion in the second quarter. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
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As parts of the world brace for a second wave of Covid-19 infections, the economic impact on Asia will likely be "limited" as the region will remain resilient, according to a Credit Suisse strategist. "I think clearly Asia is going to be resilient in the face of a second wave in developed markets in the West," said Dan Fineman, co-head of equity strategy for Asia Pacific at the Swiss bank. The U.S. is seeing a surge in coronavirus cases again in recent days, while some countries in Europe are also seeing another sharp spike. "We need to look at the shift in consumption patterns that has occurred in the West since the Covid pandemic began. Although services spending has cratered in a number of countries as the pandemic hit, we've seen a shift of consumption patterns away from services towards goods — and that has enabled Asian exports to improve in recent months," he said. "As long as that shift in consumption patterns in the West continues away from services towards goods, actually the damage to Asia from a second wave in the West might be quite limited," he told CNBC's "Street Signs Asia" on Tuesday. Top picks There are some countries worth investing in due to how they've managed the pandemic, Fineman said. He flagged South Korea as a "top pick." "They've handled the pandemic quite well, and they don't really have much of a domestic problem as far as the pandemic is concerned," Fineman said, adding that the outlook for the country's export sector has also improved. If the global economy is going to gradually recover in 2021, 2022, that means … the outperformance of emerging markets is likely. Tai Hui chief Asia market strategist at J.P. Morgan Asset Management Fineman also recommended countries such as Australia and Singapore, which he said had "relatively low risk on the pandemic." He added: "We would be looking to rotate into the higher risk, harder hit economies, places like say Hong Kong or Thailand, which have suffered more from the pandemic – if we get good news on vaccine phase three trials." Global outlook But there would be risks for corporate debt if there isn't another stimulus package in the U.S., warned Tai Hui, chief Asia market strategist at J.P. Morgan Asset Management. Uncertainty still looms over the White House and it is unclear whether the Republicans will be able to strike a stimulus deal with Democrats before the election. White House economic advisor Larry Kudlow told CNBC's "Squawk Box" on Monday that talks had slowed down, but noted they were still ongoing. However, Tai said the high yield market has already priced in some of the default risks. He said current spreads are already reflecting some of those concerns. If the global economy moves to gradual recovery next year, it will benefit emerging market assets as well as U.S. and European corporate debt in the high-yield sector, said Tai. "If the global economy is going to gradually recover in 2021, 2022, that means … the outperformance of emerging markets is likely," he told CNBC's "Squawk Box Asia" on Tuesday. "You're likely to get a weaker U.S. dollar, which typically is good news for emerging market assets, whether it's fixed income or equities."
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Whatever the outcome, the November presidential election promises to bring a period of uncertainty and volatility to the markets. However, equities are still your best long-term bet, two experts said on Tuesday at the CNBC Financial Advisor Summit, a day-long virtual conference for financial advisors. After hitting fresh highs even during the Covid-19 crisis, stocks have proved remarkably resilient, said Jeffrey Mills, the chief investment officer at Bryn Mawr Trust. "There could be some front-loaded selling but I do feel like that's a near-term phenomenon," he said. More from FA 100:CNBC ranks the top-rated financial advisory firms of 2020Stock market is 'OK,' right now, says top advisorAdvisors use tech to helps clients adjust to new environment Overall, there is no alternative that offers a comparable return, Mills said. "There is going to be this continued pull toward equity markets — where else are you going to go when you need to earn a certain percentage to fund retirement, fund education?" When broken down by industry, infrastructure, renewable energy and technology will be among the big sector winners with a potential Joe Biden win, said Daniel Clifton, head of policy research at Strategas Securities. At the same time, Biden could ease concerns about the trade war with China and lack of stimulus to bolster the economy in the wake of the coronavirus. On the flipside, some investors fear a Biden win could lead to higher corporate taxes and tighter regulations. However, the odds that Biden could push through tax increases without a Democratic-controlled Congress, are "as close to zero as you could possibly imagine," Clifton said. Alternatively, if President Donald Trump is reelected, there will be "huge upside" in industries such as defense, financials and even the for-profits, Clifton said, including prisons, education and student loan lenders. In either case, "investors are going to have plenty of opportunities going into this election," he added.  Investors are going to have plenty of opportunities going into this election. Daniel Clifton head of policy research at Strategas Securities More than a third, or 37%, of top-rated financial advisory firms said they believe the Democratic nominee will be elected as the next U.S. president, compared to 20% predicting Trump will come out ahead, according to a recent poll of firms on the 2020 CNBC FA 100 list. Most also said that there will likely be no change in the congressional breakdown, predicting that the Republicans will retain control of the Senate and Democrats will retain control of the House. Even if the election does lead to market swings, it's not a reason to change your overall investment strategy, according to both advisors. "Using the election as a specific catalyst to make investment decisions without the benefit of hindsight is really difficult," said Mills.
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JPMorgan Chase is making a play to sell more services to millions of American small business owners, pushing into an area pioneered by fintech firms including Square, PayPal and First Data, CNBC has learned. The bank is rolling out a checking account that is paired with a new fintech-inspired service called QuickAccept, according to JPMorgan executives. QuickAccept lets merchants take card payments within minutes, either through a mobile app or a contactless card reader, and users will see sales hit their Chase business accounts on the same day. That fast funding is offered free, unlike competitors including Square, which typically take a day or more and charge a 1.5% fee to make instant transfers. "Our competition either doesn't have same-day funding, or they charge for it," Max Neukirchen, CEO of JPMorgan's merchant services arm, said in an interview. "We think it's a great differentiator for businesses because getting money into their account quickly is so important as they manage their cash flow." The move shows that JPMorgan, the biggest U.S. bank by assets, isn't content letting newer rivals monopolize emerging trends. Small merchants struggled with point-of-sale card transactions until 2009, when Twitter co-founder Jack Dorsey came up with the idea for a piece of hardware that attached to smartphones. That was the launching point for Square, and now the company manages $100 billion in payment volumes annually and has an $83 billion market capitalization. That swift ascent caught the eye of JPMorgan CEO Jamie Dimon, who mentioned Square during a February 2019 investor conference. "They came out with this whole dongle to process stuff and it was a great idea," Dimon said at the event. "They did all stuff we could have done that we didn't do." Square slipped 2.5% in premarket trading on Wednesday. Besides Square, PayPal is a major player in this arena. The payments firm, which first gained traction as the rails for eBay sellers, now has 346 million active accounts globally. Another player is Clover, an Andreessen Horowitz-backed start-up that was acquired by First Data in 2012. First Data was later bought by Fiserv. Max Neukirchen, CEO of Merchant Services, JP Morgan Source: JP Morgan Now, as fintech firms including Square and PayPal move more directly into competition with banks by offering lending products and digital wallets that increasingly resemble checking accounts, JPMorgan is ready to fight back. The bank designed its QuickAccept card reader, a hardware device that processes card payments via tap, dip or swipe, internally with the help of a team gained from its 2017 WePay acquisition, Neukirchen said. The firm leaned on tech investments made in the bank's Treasury Services division to help process payments faster, he said. Mass migration JPMorgan will migrate "a large portion" of its more than three million small business customers to the new service, said Jen Roberts, CEO of the Chase business banking unit. It is targeting customers with less than $500,000 in annual revenue who want to avoid paying fees, she said. The pitch to these customers: Bring more of your overall transactions to JPMorgan's new all-in-one solution, called Chase Business Complete Banking, rather than cobbling together services from banks and fintech providers, she said. A monthly fee is waived if they hit either $2,000 in average daily balances, $2,000 in QuickAccept volumes or $2,000 spent on a small business credit card. "We know there are obviously those that are using competitors' products, we can see them settling into their deposit accounts," Roberts said. "Our hope is that through this more integrated experience, they will migrate their business over to QuickAccept through Business Complete Banking." Instead of having to separately sign up for a merchant services account, a process that JPMorgan said previously took longer than a week, payments capabilities can be unlocked with a few clicks. Processing fees At stake for JPMorgan and its competitors, of course, are lucrative card-processing fees. The bank charges 2.6% plus 10 cents per tap, dip or swipe transaction and 3.5% plus 10 cents per transaction that is keyed into the mobile app, JPMorgan said. The card reader costs $49.95. That's all in line with what competitors charge. Jen Roberts, CEO of Business Banking, JP Morgan Source: JP Morgan The upheaval caused by the coronavirus pandemic could prove to be an opportunity for Chase. The bank piloted its service in Utah earlier this year, and 95% of users were new to the bank's small business brand, and more than two-thirds were owners of businesses formed this year, the bank said. The bank's experience there suggests that it's not just digitally-savvy e-commerce merchants that will benefit from this new service, but other sectors that have resisted electronic payments until now, Roberts said. "We've had construction companies, landscapers, people who don't like to accept credit cards regularly but will do it for a big ticket," she said. "They want to accept payments easily while they're on the go, but they aren't who you would consider e-commerce."
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Mario Gabelli Scott Mlyn | CNBC Investor Mario Gabelli struck a positive note on Tuesday on the U.S. economy even as coronavirus cases in the country are on the rise. More than 8 million coronavirus cases have been confirmed in the U.S. alone, according to data from Johns Hopkins University. A CNBC analysis also found that cases are growing by 5% or more in 35 states. This recent infection increase comes as the latest economic data shows signs the U.S. recovery may be stalling. However, Gabelli thinks the U.S. economy will continue to recover into the new year. "In the U.S., I see extraordinarily good growth in 2021," Gabelli, chairman of Gamco Investors, said at the annual CNBC Financial Advisor Summit. "That's because of a long runway for automobiles, a long runway for housing and I see some return of spending in commercial aviation." Fiat Chrysler reported earlier this month their auto sales jumped 38% from the second to third quarter. Meanwhile, General Motors said its car sales improved sequentially each month during the third quarter. The used-car market in the U.S. has also been on fire this year as more people avoid mass transportation during the coronavirus pandemic, pushing shares of Autonation and CarMax sharply higher. On the travel front, the Transportation Security Administration said Monday they screened more than 1 million travelers over the weekend, reaching a seven-month high. Airline stocks have been under massive pressure in 2020 as the pandemic upended the overall travel industry. However, airline shares are up sharply over the past six months as the travelers feel more comfortable flying. Delta Air Lines and United are both up at least 30% over the past six months. JetBlue and American Airlines have gained 42.5% and 15.7%, respectively, over that time period. Gabelli also advised investors buy a market-tracking exchange-traded fund, which could lead to annualized returns ranging between 6% to 8% over the next decade. To be sure, Gabelli sees some risks on the horizon. He noted that while the Federal Reserve is expected to maintain an easy stance on monetary policy near term rates will start rising "over time." "If I go back 30 to 40 years ago, the 10-year yield was at 7% or 8%. Today, it's [about] 70 basis points," Gabelli said. "So, what's going to happen to multiples when those rates invariably rise to reflect the underlying inflation?" Gabelli added that "taxes are likely to go up," which would hinder corporate profits. Opportunity in sports betting The investor highlighted sports betting companies as an attractive investment opportunity as professional sports leagues ramp up their seasons and more states legalize sports gambling. "I'm looking at how to participate in that," he said, noting that stocks such as Manchester United, Liberty Media Braves and MSG Networks are attractive investments with exposure to this trend. Manchester United shares are down more than 30% year to date along with Braves stock. MSG Networks — which broadcasts games of the New York Knicks and New York Rangers —  has dropped 46.8% in 2020.
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Would you talk differently if you knew a machine was listening to you and grading you based on what you were saying, or based on whether you were using positive or negative words, or even if the sound of your voice was optimistic or pessimistic? Apparently, Wall Street executives are talking differently. They are trying to game machine algorithms on earnings calls. You've heard of George Carlin's "7 words you can't say on TV?" We may now have "words you can't say on an earnings report." A recent study found that executives on earnings calls are increasingly avoiding using negative words and trying to sound more upbeat, so machine algorithms will score the call as more "positive" than "negative." Oh man. Anything to fool the algos. This is a new round in the war between machines and people. Machines can fool people, but people are trying to fool machines, too. All of this makes sense if you understand the evolution of trying to figure out what is "really" going on with corporate earnings. First, there were earnings reports, which came out of the creation of the Securities and Exchange Commission in the early 1930s. Then there were earnings calls. Then there were analysts trying to figure out the "body language" of the executives on the calls to determine how they "really" felt about their company prospects. Then came machines listening to executives for keywords that were deemed important and deciding whether the calls sounded "upbeat" or "downbeat" based on the words being used. Now, there's a new twist: Seems like the executives have figured out that the machines are listening, and that if they (the executives) avoid using certain words that sound "downbeat" or "negative" they can improve the score they will get, and their earnings call will magically sound more positive. So say Sean Cao, Wei Jiang, Baozhong Yang & Alan L. Zhang, authors of "How to Talk When a Machine Is Listening: Corporate Disclosure in the Age of AI," published on the National Bureau of Economic Research website. Their main conclusion: "Firms with high expected machine downloads manage textual sentiment and audio emotion in ways catered to machine and AI readers, such as by differentially avoiding words that are perceived as negative by computational algorithms as compared to those by human readers, and by exhibiting speech emotion favored by machine learning software processors." In other words, humans are using words they think the machines want to hear and that will give them a more positive score. The authors noted that this effect was particularly notable on companies that had very high interest in their filings. In other words, the more people paying attention, the more likely the execs were to change their behavior. Of course, we have known for years about the ability of machines to analyze earnings calls, but the authors say "our study is the first to identify and analyze the feedback effect, i.e., how companies adjust the way they talk knowing that machines are listening." OK, so we are in a giant hall of mirrors. Humans (investors) are trying to figure out what other humans (corporate executives) really feel about their company's prospects by listening to earnings calls that are analyzed by machines, and the humans (corporate executives) are changing their behavior so the machines will tell the other humans (investors) that things are better than they really are, or at least as good as the executives really meant it to sound. Got that? What could go wrong? "Humans are taking machines and using them to analyze emotional signals so we can analyze other humans more efficiently," said DataTrek's Nicholas Colas. "But the machines are doing it on a scale humans could never do. There's an endless loop that is being set up, and expect this to get even more refined over time." Even the study authors are a little worried about where this will ultimately lead us: "Such a feedback effect can lead to unexpected outcomes, such as manipulation and collusion," they said. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
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U.S. President Donald Trump holds a campaign rally in Carson City, Nevada, October 18, 2020. Carlos Barria | Reuters The S&P 500 is up about 5% since the end of July, and that higher market historically would favor the occupant of the White House if stocks hold their gains into the election. But strategists say the so-called stock market indicator may not be working for President Donald Trump, and it looks like the market is betting on a win by Joe Biden. The Democratic former vice president leads by 8.9% in RealClearPolitics average of major polls. "You could say the market is discounting that Trump is going to lose," said Daniel Clifton, Strategas Research head of policy research. "Normally, the S&P predicts the presidential election, but that's usually confirmed by the election portfolio." Clifton said a portfolio of stocks that should do well during a Biden presidency have been outperforming Trump stocks. For instance, the Invesco Solar ETF TAN has gone from $45.01 on July 31, to $74.63, up 1.5% Monday in a down market. Biden is a proponent of more clean power and solar energy. Sam Stovall, CFRA chief investment strategist, said since World War II, there have been only two instances where the president or his party lost in November when the market was higher between July 31 and the November election. Stovall believes this year could be similar because there is a geopolitical disruption — the coronavirus pandemic. One of the years when the S&P indicator didn't work was 1968, when the nation was divided over the Vietnam War. There were protests and presidential candidate Robert Kennedy and civil rights leader Martin Luther King Jr. were assassinated. That year, the S&P 500 was up 5.8%, and Americans elected Republican Richard Nixon president. In 1980, Democrat Jimmy Carter did not win reelection. During his term, 52 American diplomats and citizens were held hostage in the U.S. Embassy in Tehran for more than 400 days, and were released when Republican Ronald Reagan was inaugurated. Stovall said those two election periods were affected by geopolitical disruptors, and this year the market is already pricing in some of Biden's policies. "I think the market is moving 40% on things getting better with Covid, and then 60%, based on the election, the belief we should end up with a Democratic victory and a likely Democratic sweep, that would increase the possibility of economic stimulus coming from Washington," said Stovall. Biden 'portfolio' higher Matthew Bartolini, head of SPDR Americas Research at State Street Global Advisors, said the Biden portfolio is showing up in clean energy ETFs, like SPDR S&P Kensho Clean Power ETF CNRG, a clean energy fund, and in SPDR S&P Kensho Intelligent Structures SIMS, an ETF focused on sustainable, intelligent infrastructure. "[CNRG] is one of the best performing ETFs in our lineup. ... We've seen a vast move upward, 160% since March 23," he said. SIMS is also up about 80% this year. For a Trump portfolio, he would include ETFs for metals and mining and traditional infrastructure, such as XME, the SPDR S&P Metals and Mining ETF, and XLI, the Industrial Select Sector SPDR Fund ETF. Trump and Biden, are diametrically opposed on trade. "Biden takes more of a globalist view, repealing tariffs that have been put in place," said Bartolini. He said he would suggest SPDR S&P China ETF GXC and FEZ, the SPDR Euro Stoxx ETF. Bartolini said Trump's "America First" strategy is more U.S. focused, so his policy may positively impact ETFs that represent American small and mid-cap stocks, such as SPSM, the SPDR Portfolio S&P 600 Small Cap ETF, and SPMD, the SPDR Portfolio S&P 400 Mid-cap ETF. Biden wants to raise taxes, so that may hurt sectors with high effective tax rates like consumer staples and retail, Bartolini said. The retail ETF is XRT, SPDR S&P Retail ETF. "The market is starting to believe Joe Biden will not raise the corporate tax rate until 2022. There's a possibility he would raise taxes in 2021 but would have a phase-in," said Clifton. "From a market perspective, the Strategas high tax basket which should be underperforming is not underperforming. The market is saying 'we're really not sure taxes are going up in 2021.'"
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CNBC's Jim Cramer  is worried President Donald Trump's administration will keep applying pressure to China into the election, creating a headwind for the market.  "I think that the president is keeping the heat on. I expect more negatives about China," Cramer said on "Squawk on the Street." Cramer's remarks Thursday come as the relationship between the U.S. and China continues to grow increasingly frigid, following a brief cooling in January after the two sides agreed to a phase-one trade agreement. However, China is reportedly far from meeting its commitments on goods purchases under the deal, which was reached after a back-and-forth tariff war between the world's two largest economies that began in 2018.   At a White House briefing Monday, Trump said the trade deal now means "very little in the overall import of things," then again criticized China's handling of the coronavirus and blamed the country for the pandemic.  "We view China differently than we did eight months ago. Very much differently," said Trump, who had initially praised China's coronavirus response but now argues its government was not transparent in sharing information on the initial outbreak.  While the virus emerged from Wuhan, China, public health experts say the U.S. government's failure to act quickly to contain the virus, as well as a lack of coordination between federal and state entities, are partly responsible for America having more reported cases of Covid-19 than any other country.  White House spokesman Judd Deere said in a statement to CNBC that Trump "is constantly reviewing our relations with China." But the president has "nothing to announce at this time," Deere added.  The Trump administration has also ratcheted up scrutiny of Chinese tech companies — specifically ByteDance, which owns the social media video app TikTok, and Tencent, which owns the messaging app WeChat.  Last week, Trump signed a pair of executive orders that banned U.S. firms from transacting with ByteDance and Tencent's WeChat. The orders go into effect in September, although there is still some confusion over how they would be implemented.  Business leaders from major American companies including Ford Motor Co. and Disney voiced their concerns over a WeChat ban to the White House earlier this week, according to a report from The Wall Street Journal.  Tensions between the U.S. and China also have intensified over Beijing's sweeping national security law it imposed on Hong Kong this summer. The Trump administration recently sanctioned 11 people, including Hong Kong Chief Executive Carrie Lam.  The U.S. Treasury Department said it was targeting Lam for "implementing Beijing's policies of suppression of freedom and democratic processes" in the former British colony.  China responded with its own batch of sanctions on U.S. officials, including Republican U.S. Sens. Ted Cruz of Texas and Marco Rubio of Florida.  - CNBC's Berkeley Lovelace Jr. contributed to this report. 
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