Morning coffee

What's in the cards for 2021?

Following one of the craziest years in recent memory, and one that almost nobody could have foreseen, investors are sketching their market predictions for 2021. "Recovery," "rotation," "reset" are some of the words being tossed around by analysts and investment firms, but only time will tell if the forecasts hold true. Other themes: Will COVID herd immunity be achieved? What about the economic policies of the incoming Biden administration? Fiscal and monetary policymaking? Will the labor market return to what it once was? Corporate earnings? What will happen with U.S.-China trade? Will crypto go mainstream? Electric vehicles and space exploration? IPOs and the SPACtacular market? Any other stock-related tea leaves? First session of the year

"The stock market is positioned for further gains in 2021 based on the twin pillars of coordinated fiscal and monetary policy from the U.S. Treasury and the Federal Reserve Board and a successful COVID vaccine rollout,” wrote Marc Chaikin, CEO of Chaikin Analytics. "However, we envision some bumps in the road on the way." Those bumps aren't coming this morning, with traders awaiting the first opening bell of 2021 and stock index futures ahead by 0.5%. Wall Street is also keeping an eye on Georgia's Senate runoff election tomorrow, which will decide control of the chamber and the fate of the incoming Biden administration's economic policy. Over the weekend, President Trump pressured Georgia's top election official to "find" enough votes to overturn his defeat in the state, while Nancy Pelosi was reelected as House speaker.

Big moves for Bitcoin

While most markets were closed over the first weekend of 2021, an eye-popping rally for Bitcoin (BTC-USD) continued with a jump over $34,000 before the crypto tumbled nearly 11%. Putting it in perspective: Bitcoin tripled in value during 2020 and the latest leg higher added more than 50% to its value since crossing $20,000 just two weeks ago. "The currency will be on the road to $50,000 probably in the first quarter of 2021," said Antoni Trenchev, managing partner and co-founder of Nexo in London, which bills itself as the world's biggest crypto lender. Bolder forecasts? Bitcoin should eventually climb to about $400,000, Scott Minerd, chief investment officer of Guggenheim Investments, told Bloomberg in a Dec. 16 interview. (456 comments)

The great delisting

China said it will take "necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises" after the NYSE started the process of delisting Chinese telco giants to comply with a U.S. executive order issued in November. Among those facing delisting from the NYSE are China Mobile (NYSE:CHL), China Telecom (NYSE:CHA) and China Unicom Hong Kong (NYSE:CHU), which will be suspended from trading between Jan. 7 and Jan. 11. The executive order has also resulted in a series of companies being removed from indexes compiled by MSCI, S&P Dow Jones Global Indices and FTSE Russell, marking the latest escalation in tensions between the U.S. and China. President Trump further signed a law last month that would kick Chinese companies off American exchanges if they have failed to comply with the U.S. Public Accounting Oversight Board's audits for three years in a row.

Could a COVID vaccine passport be issued in the U.S.?

"Anything is on the table. Anything is possible, of course," Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told Newsweek. "I'm not sure if it's [the COVID-19 vaccine] going to be mandatory from a central government standpoint, like federal government mandates. But there are going to be individual institutions that I'm sure are going to mandate it" like companies, hospitals and schools. Looking abroad, Israel plans to launch a pilot of its "green passport" program on Jan. 5 to residents who have received a coronavirus vaccine or those who have recovered from the illness with antibodies. The passport will lift some restrictions, including mandatory quarantine following exposure to an infected person or traveling abroad, and may even be used for visiting malls or attending cultural and sporting events. While legal issues of the passport are still being debated, the country is leading the world in COVID vaccinations per capita. (347 comments)

Another reason for Musk to dance

Tesla (NASDAQ:TSLA) shifted into Ludicrous Mode this morning, with the stock up another 3% to $725/share, after the automaker delivered 499,550 vehicles for the year, which was a hair shy of its half a million target. That's despite the Fremont factory shutdown period in the spring and other difficulties related to the coronavirus pandemic. In 2021, investors are likely expecting another year of sharp growth in vehicle deliveries from Tesla as the EV maker expands in China and opens new factories near Austin and Berlin. Rivals Nio (NYSE:NIO) and Xpeng Motors are also soaring in premarket trade after reporting solid delivery figures.

World's fourth largest carmaker

Following two years of on-again off-again talks, the transformation of the car industry and a global pandemic, shareholders are poised to sign off on a merger today between Fiat Chrysler (NYSE:FCAU) and Peugeot (OTCPK:PEUGF) owner PSA. Calling the combined company Stellantis, executives hope to boost returns with scale. It'll utilize Fiat's Ram and Jeep divisions in North America, revitalized Peugeot and Citroen brands that have excelled in Europe, as well as greater resources to compete with electric carmakers that are reshaping the sector. Many challenges await. Neither company has much of a foothold in the luxury car business or China's vast auto market. The prior merger of Fiat and Chrysler also did little to improve the fortunes of Alfa Romeo and Maserati, while PSA's purchase of Opel only made the company more reliant on Europe.

Dollar logs first annual drop since 2017

The U.S. Dollar Index, a measure of the greenback against a basket of six major rivals, fell 6.7% in 2020, marking the first annual drop for the currency since a 9.9% decline in 2017. "Just under three months into 2020, the dollar was the world's strongest major currency, though it was marginally weaker against the Hong Kong dollar," said Kit Juckes, global macro strategist at Société Générale. "Since the Fed's volley of policy actions in late March however, it is weaker against almost everything." Will the downtrend continue? Actions from the Fed like financial market liquidity and expanding swap lines with foreign central banks have all been credited with helping the dollar turn south, and easy money policies look only set to increase under the Biden administration.

OPEC+ decides on production levels

A weaker dollar and investors positioning for a recovery in the oil sector could support oil prices in 2021, Energy Aspects analyst Virendra Chauhan declared as crude touched multi-month highs at $49/bbl. The forecast comes as OPEC+ looks poised to cap output at current levels in February, with the group meeting via videoconference (it previously decided to raise output by 500K barrels per day in December and agreed to meet every month to review production). Prices ended 2020 about 20% below 2019's average, weighed down by global lockdown measures, which have slashed fuel demand, as well as a price war between Saudi Arabia and Russia. Not out of the woods yet... OPEC Secretary General Mohammad Barkindo said Sunday that while crude demand is expected to rise by 5.9M barrels per day to 95.9M bpd this year, the group sees plenty of downside demand risks in the first half of 2021. What else is happening...

Moderna (NASDAQ:MRNA) vaccine doses may be cut in half to hasten rollout.

More drug price hikes, but at lower rate than last year.

Facebook's (NASDAQ:FB) advertising integrity chief departs company.

Roku (NASDAQ:ROKU) bids to acquire rights to Quibi's content - WSJ.

Icahn sells most of Herbalife (NYSE:HLF) stake, gives up board seats.

Today's Markets

In Asia, Japan -0.7%. Hong Kong +0.9%. China +0.9%. India +0.6%. In Europe, at midday, London +2.7%. Paris +1.5%. Frankfurt +1.2%. Futures at 6:20, Dow +0.6%. S&P +0.5%. Nasdaq +0.5%. Crude +0.9% to $49. Gold +2.3% at $1938.30. Bitcoin -10.8% to $30013. Ten-year Treasury Yield +1 bps to 0.93%

Today's Economic Calendar

9:45 PMI Manufacturing Index 10:00 Construction Spending 10:00 Fed's Evans: Economic Conditions and Monetary Policy 10:00 Fed's Bostic Speech 12:15 PM Fed's Mester Speech 12:30 PM Investor Movement Index 6:00 PM Fed's Mester Speech