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Stock futures rise after Yellen pushes for more stimulus

Yellen told CNBC that more stimulus is necessary even as some economic data suggested a swift rebound.

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Stock futures were higher early Friday after Treasury Secretary Janet Yellen said a large Covid relief package is needed for a full recovery in the U.S.

Dow Jones Industrial Average futures implied an opening gain of about 100 points. S&P 500 futures added 0.4%, while Nasdaq 100 futures gained 0.5%.

Yellen told CNBC Thursday after the bell that more stimulus is necessary even as some economic data suggested a rebound is already underway. She added a $1.9 trillion stimulus deal could help the U.S. get back to full employment in a year.

“We think it’s very important to have a big package [that] addresses the pain this has caused – 15 million Americans behind on their rent, 24 million adults and 12 million children who don’t have enough to eat, small businesses failing,” Yellen told CNBC’s Sara Eisen during a “Closing Bell” interview.

“I think the price of doing too little is much higher than the price of doing something big. We think that the benefits will far outweigh the costs in the longer run,” she added.

The stock market’s rally to records has stalled a bit this week as fears of rising rates and higher inflation crept in. The S&P 500 fell for a third straight day on Thursday after a worse-than-expected reading on jobless claims as well as weak guidance from Walmart. The 10-year Treasury yield this week rose to the highest in nearly a year, though on Friday was still at only 1.30%.

Yellen said she doesn’t believe inflation should be the biggest concern.

“Inflation has been very low for over a decade, and you know it’s a risk, but it’s a risk that the Federal Reserve and others have tools to address,” she said. “The greater risk is of scarring the people, having this pandemic take a permanent lifelong toll on their lives and livelihoods.”

Many on Wall Street agree with Yellen that a large stimulus is needed and that a trillion-dollar package, along with a smooth economic reopening this year, will cause the market rally to continue.

“A big part of our rationale for additional gains from here is dependent on a continued belief that the major drivers that helped carry the market to current levels will remain intact,” Scott Wren, Wells Fargo’s senior global market strategist, said in a note. One of the drivers is “additional stimulus from Congress that will help bridge the gap between now and when vaccines are widely distributed.”

The House of Representatives will try to pass a $1.9 trillion coronavirus relief plan before the end of February, Speaker Nancy Pelosi said Thursday. Democratic Congressional leaders may try to pass a package without votes from Republicans.

Applied Materials, which makes the equipment used to manufacture semiconductors, gave a better-than-expected second-quarter forecast after the bell Thursday. The shares gained 5% in premarket trading Friday. Other chip-related stocks also rose, including Lam Research, AMD and Nvidia.

The S&P 500 and the Nasdaq Composite are down 0.5% and 1.6% this week, respectively, on track to break their two-week winning streak. The blue-chip Dow is up just 0.1% week to date.

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Source: https://www.cnbc.com/2021/02/18/stock-market-open-to-close-news.html

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Fauci says all three Covid vaccines highly effective, urges people to take shot most available

The FDA approved Johnson & Johnson’s vaccine on Saturday, giving the U.S. a third tool to fight the pandemic following vaccines from Moderna and Pfizer.

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Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, speaks during a White House press briefing, at the James Brady Press Briefing Room of the White House January 21, 2021 in Washington, DC.

Alex Wong | Getty Images

White House Chief Medical Advisor Dr. Anthony Fauci said on Sunday he would take the newly approved Johnson & Johnson Covid-19 vaccine and urged Americans to take whichever shot is available when they are eligible.

The Food and Drug Administration approved J&J’s vaccine on Saturday, giving the U.S. a third tool to fight the pandemic following vaccines from Moderna and Pfizer. The company expects to deliver 20 million doses by the end of March.

“All three of them are really quite good, and people should take the one that’s most available to them,” Fauci said on NBC’s “Meet the Press.”

“If you go to a place and you have J&J, and that’s the one that’s available now, I would take it,” Fauci said. “I personally would do the same thing. I think people need to get vaccinated as quickly and as expeditiously as possible.”

The J&J vaccine is different from the others because it’s a one-dose regimen and does not require patients to return for a second dose. It can be stored at refrigerator temperatures for months. The shot has demonstrated 66% effectiveness overall, 72% in the U.S. and 57% in South Africa, which has seen a rapid spread of the B.1.351 variant.

Though the Pfizer and Moderna vaccines showed higher efficacy rates in trials using two doses versus J&J’s single-dose vaccine, Fauci insisted that the J&J shot is not a weaker vaccine and said trial data shouldn’t be compared for the three shots because they were tested at different times.

“You now have three highly efficacious vaccines, for sure,” Fauci said. “There’s no doubt about that.”

While the country is seeing a decline in new coronavirus cases and an improvement in the vaccination rate, Fauci warned states not to prematurely loosen pandemic restrictions, a move which could lead to another surge in infections.

Cases have plummeted from 300,000 a day to roughly 70,000, a baselines that’s still too high, Fauci said.

“We don’t want to continue to prevent people from doing what they want to do. But let’s get down to a good level,” Fauci told CBS’ “Face the Nation.” “Let’s get many, many more people vaccinated. And then you could pull back on those types of public health measures.”

“But right now, as we’re going down and plateauing is not the time to declare victory because we’re not victorious yet,” he said.

The Food and Drug Administration approved J&J’s vaccine on Saturday, giving the U.S. a third tool to fight the pandemic following vaccines from Moderna and Pfizer. The company expects to deliver 20 million doses by the end of March.

Source: https://www.cnbc.com/2021/02/28/fauci-all-three-covid-vaccines-highly-effective-urges-people-to-take-available-shot.html

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DraftKings shares rise after reporting a beat on revenue, more growth in paying customers

DraftKings said it has 1.5 million monthly unique payers as of its fourth quarter.

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New England Patriots cornerback Stephon Gilmore (24) stretches during the New England Patriots practice session in Foxborough, MA on Oct. 22, 2020.

Barry Chin | Boston Globe | Getty Images

Shares of sports betting company DraftKings jumped as much as 8.4% Friday after the company reported fiscal fourth quarter 2020 earnings that beat revenue expectations and growth in paying customers.

The company’s stock closed up nearly 6.5%.

Here are the key numbers:

  • Loss per share: 24 cents, vs. an expected loss of 47 cents, according to a Refinitiv survey of analysts
  • Revenue: $322 million vs. $232.6 million expected, according to Refinitiv

DraftKings said it now 1.5 million monthly unique paying customers as of its fourth quarter. It was estimated to report 1.43 million, according to Factset. Average revenue per monthly unique payer was $65 in the quarter, DraftKings said. The company surpassed 1 million users in its third quarter.

The company also raised its revenue outlook for the fiscal year 2021 from a range of $750 million to $850 million to a range of $900 million to $1 billion. DraftKings pointed to strong user activation due to its 2020 marketing spend, the launch of mobile sports betting and iGaming in Michigan and mobile sports betting in Virginia, and its performance in the fourth quarter.

“This guidance also assumes that all professional and college sports calendars that have been announced come to fruition and that we continue to operate in states in which we are live today,” the company said.

The growing sports-betting market in the U.S. has also allowed DraftKings to expand its market reach since it went public through a SPAC last April.

Currently, 20 states, plus Washington, D.C., allow online sports betting, up from 19 this past quarter. Five states legalized sports wagering but are not yet operational, and 16 states are working on legislation, up from six and two, respectively.

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The company’s stock closed up nearly 6.5%.

Source: https://www.cnbc.com/2021/02/26/draftkings-dkng-q4-2020-earnings.html

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As store owners sign more short-term leases, landlords are taking a risky bet on the future of retail

Leases on about 1.5 billion square feet of retail space in the U.S. are set to expire this year, according to CoStar Group, or about 14% of the retail market.

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Shoppers walk through the King of Prussia mall in King of Prussia, Pennsylvania.

Jennah Moon | Bloomberg | Getty Images

Retailers and their landlords are engaged in a high-stakes game of risk right now. And it will be a few years until we find out which party is on the winning side.

As thousands of retail leases come up for renewal, their duration is increasingly shrinking, as businesses grapple with an unpredictable future and look for ways to slash costs, stay flexible and maintain leverage over their landlords, even after the health crisis abates.

The risk is a two-way street, though. Because on one hand, in two or three years, mall and shopping center owners could have the chance to turn the tables back in their favor, by hiking rents or booting retailers out for another tenant. But more short-term deals could also leave landlords with even greater vacancies down the line.

Best Buy Chief Executive Corie Barry said Thursday that the big-box retailer’s average lease term is definitively dwindling.

She said the company has about 450 leases coming up for renewal in the next three years, or an average of 150 annually. The electronics retailer has closed about 20 of its larger-format locations each of the past two years, but expects to shut even more in 2021, she said.

“As we look to the near-term, there will be higher thresholds on renewing leases, as we evaluate the role each store plays in its market, the investments required to meet our customer needs, and the expected return based on a new retail landscape,” Barry said during a conference call with analysts.

The trend spreads far across the retail landscape and into malls. Apparel companies are increasingly rethinking whether it makes sense to be in an enclosed shopping center anchored by department stores that are struggling to lure shoppers and grow sales.

Vans and Timberland owner VF Corp. said leases for its stores have been trending shorter for years. But they’ll be even briefer coming out of the pandemic, according to the company’s chief financial officer, thanks to recent and ongoing negotiations. VF Corp. is making the shift to allow it the freedom to close stores more quickly.

“The way we structure our leases now allows us to be quite nimble, quite agile, and … we can pivot as consumer behavior changes,” CFO Scott Roe said in a recent phone interview.

The retailer’s average lease term is about four years, Roe said, and will soon be even shorter as new agreements are signed.

“The landlords have been cooperative and working with us,” VF Corp. CEO Steven Rendle added. “We both have the same objective, which is to be viable and to be productive.”

Vacant space abounds

While it has traditionally been in a landlord’s best interest to sign a long-term lease — lasting 10 or 20 years — to limit risk and keep a space filled as long as possible, many are succumbing to the pressures brought on over the past 12 months.

With vacant space abounding in many markets across the country, tenants such as retailers and restaurateurs are finding themselves in a greater position of power. It’s a trend that many real estate experts expect will only proliferate, and become the norm, from here.

Leases on roughly 1.5 billion square feet of retail space in the United States are set to expire this year, according to a tracking by the real estate services firm CoStar Group. That’s about 14% of the retail market. So either those leases won’t be renewed, and more retail stores will close, or those contracts will be renegotiated.

‘We’re OK with that’

To be sure, while short-term leases can pose a greater risk for landlords, which then have to deal with unpredictable waves of tenants moving in and out, it goes both ways. Retailers could sign a short-term lease and rents could trend higher in the future if the market strengthens.

David Simon, CEO of mall owner Simon Property Group, told analysts during a conference call in early February that there has been an interest among tenants to go “a little bit shorter term.” Simon is signing more three-year leases these days, he said.

“We’re OK with that, because I’d rather negotiate two or three years from now” than not have a store filled at all, he explained. “I think actually that could be in our best interest, too, because … we don’t quite have the ability to point to sales as a way to increase rent,” he said.

“It’s actually a two-way street, and it’s working out fine with a vast majority of our retailers,” Simon said.

Beth Azor, CEO of retail real estate management and development firm Azor Advisory Services, said she has worked on a number of super short-term deals during the pandemic. Azor, often referred to as the “Canvassing Queen” on social media by her peers, helps leasing agents fill vacant space across the country, working with a number of publicly traded real estate investment trusts, or REITs.

She recently took her service to the up-and-coming social network Clubhouse, where she has been hosting rooms for entrepreneurs to pitch their businesses, and landlords with vacant spaces can listen in. The leases are for anywhere from three months to a year, and sometimes that’s rent-free. She calls it “Space Tank,” a play off ABC’s “Shark Tank.”

Occupancy pays

According to Azor, landlords shouldn’t view the shorter-term leases as a negative, especially given the state of the retail industry. Having a tenant — period — boosts occupancy, she said, which can be helpful when other companies come knocking on the door asking for rent relief.

Businesses on the national and local level have been coming to mall and shopping center owners during the health crisis to try to renegotiate their rents down, Azor explained. And if a property is fuller, albeit with some short-term leases, it is harder for a business to argue that their rent should come down. So occupancy can, quite literally, pay off.

Outlet owner Tanger Factory Outlets has also been doing more short-term deals. Currently, about 7% of its tenants’ leases are classified as temporary, when it has normally been between 4.5% and 5.5%, CEO Stephen Yalof told analysts during a conference call earlier this month.

“A number of deals that actually started out as pop-up or short-term leases … we’ve extended the terms of those leases,” he explained. “So that seems to be a trend.”

He went on to explain that the REIT has favored maintaining high occupancy, with more shorter-term deals, over rent collection in 2020.

“We will see a lot more local and [temporary] leasing probably in the first half of the year,” he said. “But we’re very proactive with our long-term leasing to replace that tenancy and grow our permanent leasing base.”

Not all real estate seems to be prime for pop-ups, though.

New York City’s glitzy Fifth Avenue district, for example, is still largely populated by tenants with long-term leases, according to Fifth Avenue Association President Jerome Barth.

“These are going to be premium leases, no matter what … because this is still the No. 1 market in the world,” said Barth. “I think leases will evolve, and that’s going to be a constant. But people know the Avenue is going to be an exciting place to be for years to come.”

Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.”

— CNBC’s Melissa Repko contributed to this report.

The risk is a two-way street, though. Because on one hand, in two or three years, mall and shopping center owners could have the chance to turn the tables back in their favor, by hiking rents or booting retailers out for another tenant. But more short-term deals could also leave landlords with even greater vacancies down the line.

Source: https://www.cnbc.com/2021/02/26/retailers-sign-more-short-term-leases-in-a-risky-bet-for-mall-owners.html

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