“The more often a stupidity is repeated, the more it gets the appearance of wisdom,” — Doug Kass

1. Nvidia’s $40 Billion Deal for Arm Faces U.K. National-Security Probe — U.K. Digital Secretary Oliver Dowden on Monday invoked a little-used power to order the country’s antitrust agency to investigate the merger’s national-security implications and deliver a report by July 30. The secretary can eventually clear the deal, with or without conditions, or nix it. The U.K. probe is the latest example of how governments around the world are increasingly tightening control over semiconductor technology, after the past year demonstrated how access to advanced microprocessors can make or break some of their biggest companies.
2. Biden Wants to Cut Greenhouse Gas Emissions in Half by 2030 — Biden will call for reducing emissions to 50% of their level in 2005 as part of global efforts to fight climate change. Emissions fell by 21% from 2005 levels during the pandemic, but are ticking higher again this year as the economy recovers. Biden invited 40 world leaders to the White House event, including Russian President Vladimir Putin. The invitees include 17 countries responsible for 80% of global greenhouse gas emissions. More than 300 companies, including Apple, Walmart and Johnson & Johnson, sent Biden a letter last week saying they were in favor of cutting emissions by at least 50%, while others worry Biden’s policies will harm the economy.
3. Intel CEO Sees Prolonged Chip-Supply Constraints — Pat Gelsinger, Intel CEO, said the supply constraints that have affected some sectors of the global economy for months will continue until more capacity comes online to meet chip demand for everything from automobiles to electronics. Mr. Gelsinger this month laid out an ambitious strategy for Intel to become a major contract chip maker in addition to making semiconductors to satisfy its in-house requirements. The plan includes a $20 billion spending commitment to build two new semiconductor plants in Arizona.
4. J&J Covid-19 Vaccine Pause Over Blood-Clot Fear Is Under Review — J&J vaccine injections were put on hold last week after reports of rare blood-clot conditions in a small number of recipients, including at least three fatalities. Many public-health authorities, however, contend that the benefits of the vaccine outweigh the risks. Anthony Fauci, President Biden’s chief medical adviser, has predicted the U.S. pause would end as soon as Friday, perhaps with new restrictions or warnings. A recommendation to lift the pause—and agreement by the FDA and CDC—could put the vaccine back in circulation as early as this weekend, because millions of doses have already been distributed to vaccine sites.
5. Biden Eyeing Tax Rate as High as 43.4% in Next Economic Package — For those earning $1 million or more, the new top rate, coupled with an existing surtax on investment income, means that federal tax rates for wealthy investors could be as high as 43.4%. The new marginal 39.6% rate would be an increase from the current base rate of 20%, the people said on the condition of anonymity because the plan is not yet public. A 3.8% tax on investment income that funds Obamacare would be kept in place, pushing the tax rate on returns on financial assets higher than rates on some wage and salary income, they said. Other measures that the administration has discussed in recent weeks include enhancing the estate tax for the wealthy. Biden has warned that those earning over $400,000 can expect to pay more in taxes. The White House has already rolled out plans for corporate tax hikes, which go to fund the $2.25 trillion infrastructure-focused “American Jobs Plan.”

The week ahead — Economic data from Econoday.com:

“There are three ingredients for success—aggressiveness, timing and skill—and if you have enough aggressiveness at the right time, you don’t need that much skill.” ― Howard Marks

1. U.S. Seeks to Pause J&J Covid-19 Vaccine Use After Rare Blood-Clot Cases — the U.S. Food and Drug Administration and the U.S. Centers for Disease Control and Prevention announced the move Tuesday, after finding that six women between the ages of 18 and 48 years who got the vaccine had developed blood clots and one died. More than 6.8 million doses have been administered in the U.S., the agencies said.. The Johnson & Johnson vaccine is one of three approved for emergency use in the U.S. along with a vaccine from Moderna as well as another from Pfizer and BioNTech. AstraZeneca ran into problems in Europe, with several countries halting use while investigating reports of blood clots. European health officials later declared the vaccine “safe and effective.”
2. Biden Says He’s ‘Prepared to Negotiate’ as Infrastructure Debate Heats Up — President Joe Biden said he is “prepared to negotiate” the size and scope of his nearly $2.3 trillion infrastructure proposal as well as how to pay for it.
Republicans argue it funds things outside the scope of infrastructure and oppose raising the corporate tax rate to fund spending. Some Democrats, such as Sen. Joe Manchin, who was not at Monday’s meeting, also oppose the higher tax rate. Others are pushing to expand the size and scope of the proposal.
3. Pfizer CEO Announces Annual Covid-19 Vaccine Booster Shots Likely Needed — Pfizer Inc. PFE 1.16% Chief Executive Albert Bourla said it is likely that people who receive Covid-19 vaccines will need booster shots within a year afterward, and then annual vaccinations, to maintain protection against the virus as it evolves. Pfizer and its partner, BioNTech SE, said recently that the shot remains highly effective six months after its second dose, and they hope to provide more information on protection beyond six months in the coming weeks.

The week ahead — Economic data from Econoday.com:

“The economy is growing, and the economic reports are positive. Corporate earnings are rising and beating expectations. The media carry only good news. Securities markets strengthen. Investors grow increasingly confident and optimistic. Risk is perceived as being scarce and benign. Investors think of risk-bearing as a sure route to profit. Greed motivates behavior. Demand for investment opportunities exceeds supply. Asset prices rise beyond intrinsic value. Capital markets are wide open, making it easy to raise money or roll over debt. Defaults are few. Skepticism is low and faith is high, meaning risky deals can be done. No one can imagine things going wrong. No favorable development seems improbable. Everyone assumes things will get better forever. Investors ignore the possibility of loss and worry only about missing opportunities, No one can think of a reason to sell, and no one is forced to sell. Buyers outnumber sellers. Investors would be happy to buy if the market dips. Prices reach new highs. Media celebrate this exciting event. Investors become euphoric and carefree. Security holders marvel at their own intelligence; perhaps they buy more. Those who’ve remained on the sidelines feel remorse; thus they capitulate and buy. Prospective returns are low (or negative). Risk is high. Investors should forget about missing opportunity and worry only about losing money. This is the time for caution!” ― Howard Marks

1. Credit Suisse Takes $4.7 Billion Hit on Archegos Meltdown — Credit Suisse reported a $4.7 billion hit from the meltdown of Archegos Capital Management, slashed its dividend and said its investment banking and risk chiefs would leave the bank. The Swiss lender has been the hardest hit by the collapse late last month of Archegos, a U.S. family investment firm, suffering a major loss in its unit that services hedge funds. The Archegos crisis emerged just weeks after Greensill Capital, a U.K. finance firm that was deeply entangled with Credit Suisse, CS 0.92% filed for insolvency and left the bank on the hook for losses.
2. EV Related Stocks for “Green Energy” — below lists EV Stocks for consideration for “Biden Infrastructure Plan”

3. Get Ready for a ‘Golden Age of Travel’ — travel appears to be taking off in a V-shaped recovery. Domestic passenger traffic hit 1.5 million passengers a day in early April versus 108,000 last April. It’s down just 38% from April 2019 levels of around 2.4 million daily passengers. Carriers are now adding back flight capacity and staffing up to handle more bookings for the summer and fall. The industry is also encouraging travel with more lenient cancellation and change-fee policies, along with ongoing efforts to reassure passengers that health safety on planes is relatively strong.
4. G20 Takes Step Toward Agreement on Minimum Corporate Tax Rate — Finance ministers from the world’s most developed economies said they hoped to agree on an overhaul of the way multinationals are taxed as well as on a minimum tax rate by the end of the year. Long-running multilateral talks on the question were given a boost this week when Treasury Secretary Janet Yellen signaled the U.S. support for the idea of a global minimum tax rate that would help end the “thirty-year race to the bottom” on corporate taxation. The U.S. also put forward this week its own proposal on how to tax the world’s largest multinationals, along lines similar to the OECD’s suggestions. It aims to raise the global minimum rate to 21% although the OECD has suggest it could be closer to 15%.
5. GM to Halt Production at Several North American Plants Due to Chip Shortage — GM said that three plants previously unaffected by semiconductor supply problems will be idled or have output reduced for one or two weeks, including a factory in Tennessee and another in Michigan that make popular midsize sport-utility vehicles. Models affected include the Chevrolet Traverse SUV and the Cadillac XT5 and XT6 SUVs.
The moves follow news last week that Ford Motor Co. would deepen production cuts in North America, including idling for two weeks a factory near its headquarters in Dearborn, Mich., that makes the F-150 pickup truck, its biggest moneymaker.
Auto makers since late last year have been grappling with a shortage of semiconductor chips, which go into software modules used to control everything from brakes to dashboard touch screens. The companies have been cutting production for months as they move to line up chip supplies, with executives saying the shortage could last several more months.

The week ahead — Economic data from Econoday.com:

“But most investors do capitulate eventually. They simply run out of the resolve needed to hold out. Once the asset has doubled or tripled in price on the way up — or halved on the way down — many people feel so stupid and wrong, and are so envious of those who’ve profited from the fad or side-stepped the decline, that they lose the will to resist further. My favorite quote on this subject is from Charles Kindleberger: “There is nothing as disturbing to one’s well-being and judgment as to see a friend get rich” (Manias, Panics, and Crashes: A History of Financial Crises, 1989). Market participants are pained by the money that others have made and they’ve missed out on, and they’re afraid the trend (and the pain) will continue further. They conclude that joining the herd will stop the pain, so they surrender. Eventually they buy the asset well into its rise or sell after it has fallen a great deal. In other words, after failing to do the right thing in stage one, they compound the error by taking that action in stage three, when it has become the wrong thing to do. That’s capitulation. It’s a highly destructive aspect of investor behavior during cycles, and a great example of psychology-induced error at its worst.” ― Howard Marks

1. Credit Suisse, Nomura Warn of Major Losses After Archegos Debacle — Nomura said in a statement over the weekend that “The estimated amount of the claim against the client is approximately $2 billion,” . Credit Suisse said the selloff could be highly significant and material to its first-quarter results. Major banks including Goldman Sachs and Morgan Stanley last week unloaded some $30 billion worth of shares in U.S. media and Chinese tech companies linked to Tiger Asia manager Bill Hwang’s Archegos Capital Management.
2. Biden Will Unveil His Economic Recovery Plan in Two Parts — the president is planning to split his $3 trillion “Build Back Better” recovery plan into two separate bills, starting with a focus on infrastructure.
The biggest beneficiaries should be electric-vehicle makers and clean-energy providers. Biden’s plan includes additional incentives to buy electric vehicles in the form of tax credits and rebates.
The second part of Biden’s plan, which will include healthcare and child care, will be released “later in April,” Press Secretary Jen Psaki said Sunday. Biden proposed a $775 billion “caregiving economy” proposal while campaigning, which would include free prekindergarten, subsidies for after-school programs and increased pay for child-care workers.
This second part is expected to meet the most resistance from Republicans, who would rather use tax incentives for things like paid family leave and let states make changes instead of authorizing additional federal spending, The Wall Street Journal reported.
3. Universal Studios Hollywood Is the Latest Theme Park to Announce Its Reopening — Universal Studios Hollywood announced its official reopening date later this month, along with a new ride called “The Secret Life of Pets.”
The Southern California theme park will open its gates on April 16 at an expected reduced capacity of 25% of its 40,000 person maximum. It will require visitors to wear face coverings and prohibit anyone with a temperature above 100.4 degrees from entering. Tickets go on sale April 8.
The restrictions are part of California’s new health guidelines, issued over the weekend, which also limit park visitors to in-state residents only.
4. Pfizer Trials Show Vaccine Is Effective for At Least Six Months — Pfizer and BioNTech’s Covid-19 vaccine remains highly effective against coronavirus for at least six months after recipients get their second dose and may work just as well against the variant first identified in South Africa, the companies said Thursday. The vaccine was found 91.3% effective among 46,307 people in a Phase 3 trial, with consistent protection across age, gender, race and ethnicity, as well as among individuals with underlying health conditions. On Wednesday, the companies reported the vaccine was 100% effective at preventing Covid-19 among children ages 12 to 15, which could pave the way for its authorization for use in that age group as early as May. Pfizer’s vaccine, currently approved for use in those 16 and older, has distributed more than 200 million doses around the world and expects to produce 2.5 billion doses this year.

The week ahead — Economic data from Econoday.com: