Wall Street Stays Serene in Face of Surging Prices. What to Watch.

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The New York Stock Exchange and a statue of President George Washington at Wall Street in New York City.

Angela Weiss / AFP via Getty Images

Potentially market-moving events are coming thick and fast but it’s all very serene on Wall Street. The Federal Reserve’s minutes released Wednesday showed its tapering plan remains on track and even suggested a slightly quicker timeline, potentially beginning mid-November. On top of that, U.S. inflation data came in higher than expectations as consumer prices rose 0.4% in September and 5.4% on an annual basis.

That’s the fifth straight month that the consumer-price index recorded an annual gain of at least 5%. So much for “transitory,” in fact “sticky” seems to be becoming the new buzzword—although used-car prices did fall.

But the forward-looking markets were unfazed; bond yields moved lower, the Dow closed flat and the S&P 500 even edged higher.

In another sign of slightly surreal calm across markets, the VIX volatility index, which measures expected volatility for the S&P 500 over the next 30 days, dropped sharply to its lowest level in three weeks. It may be worth keeping an eye on the VIX for signs of stability ahead.

The inflation worries aren’t limited to the U.S. China’s producer-price index surged 10.7% year-over-year in September, the fastest pace in almost 26 years, led by coal prices and other commodity costs. That ought to add to global inflation fears, though it didn’t spill over into the country’s consumer prices, which rose at a slower rate compared with August.

—Callum Keown

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FDA Panel to Consider Moderna’s Covid-19 Boosters Today

The Food and Drug Administration’s vaccine advisory panel meets today to consider whether to authorize booster shots of Moderna ’s Covid-19 vaccine and meets Friday about Johnson & Johnson boosters. It will also hear data about mixing and matching boosters with doses of a different company’s vaccine.

  • FDA staff said Wednesday that J&J data suggest a booster shot of its vaccine given two months after the first dose could increase immune response to 75% against moderate to severe coronavirus disease, but it didn’t independently verify it.
  • The National Institutes of Health released findings that said mixing and matching is safe, adding that recipients of J&J’s one-dose vaccine had a better response with a booster of Pfizer or Moderna’s shot than a booster of J&J.
  • Pfizer ’s vaccine with BioNTech is the only booster currently approved, for those 65 and older, the immunocompromised, and workers in at-risk settings such as hospitals or schools. Seven million people have gotten Pfizer-BioNTech boosters.
  • The Centers for Disease Control and Prevention’s vaccine experts will also review data on Moderna and J&J boosters at its meetings Oct. 20 and 21. If approved, boosters could roll out as soon as late next week.

What’s Next: The World Health Organization assembled a new team of 26 scientists to investigate the origins of the coronavirus that causes Covid-19, saying time is running out to study blood samples and other clues. China says investigators should examine the U.S. and other countries, in case it came from a lab accident.

—Janet H. Cho

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Taiwan’s Chip Giant Warns of Tight Supplies Into 2022

Chip manufacturer Taiwan Semiconductor Manufacturing Co. Thursday posted a 14% increase in net profit in the third quarter of the year, while warning it will continue to operate with tight capacity throughout 2022.

  • The group said that it is likely to exceed revenue forecasts in the last quarter of the year, boosted by booming demand for semiconductors amid persistent, worldwide shortages.
  • TSMC also warned that it will take time before it can help alleviate the current chip shortages inhibiting the global economic recovery. “We expect TSMC’s capacity to remain very tight in 2021 and throughout 2022,” CEO C.C. Wei was reported as saying in a conference call.
  • Net profit in the three months ended in September rose to T$156.3 billion ($5.56 billion), which was above analysts’ expectations. TSMC now expects sales to grow by 24% in 2021.
  • The company’s chips are used in 5G-equipped smartphones such as Apple ’s new iPhone 13. Apple accounts for about a fourth of TSMC’s revenue.

What’s Next: TSMC plans to invest $100 billion to increase production in the next few years, and announced it will build a new plant in Japan.

Pierre Briançon

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Delta Air Lines Says Holiday Travel Demand Appears Strong

Demand for holiday travel appears strong and the reopening of international travel will add to demand, said Delta Air Lines CEO Ed Bastian. But the carrier warned of pressure on profit in the current quarter because of surging fuel prices.

  • Airlines and the travel industry could get a lift from the relaxation of restrictions. Starting in November, foreign nationals must show proof of vaccination and a negative Covid-19 test within three days of boarding a U.S.-bound plane.
  • Vaccinated people traveling from Canada and Mexico can enter the U.S. over land for nonessential reasons such as shopping or visiting family starting in November, relaxing pandemic-era restrictions enacted in March 2020. Nonessential travel is still not allowed for unvaccinated people.
  • Canada reopened its border with the U.S. in August, but the U.S. postponed reopening because of the Delta variant of coronavirus. Canada is 73% fully vaccinated, compared with 57% for the U.S. and 38% for Mexico, according to Johns Hopkins University.
  • Boutique hotelier Ian Schrager told Mansion Global’s Luxury Real Estate Conference on Wednesday that hotels would survive the pandemic but still face a threat from Airbnb . “The industry has been in denial about it since the very inception,” he said. “We have to out innovate them.”

What’s Next: Bastian said corporate travel bookings have reached a new pandemic high, and that the airline will recover 75% of its prepandemic business by the end of the year. Delta expects corporate travel to reach 80% to 100% of 2019 levels by the end of 2022.

Janet H. Cho

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Port of LA to Operate at All Hours to Ease Bottleneck

The Port of Los Angeles will join the Port of Long Beach, Calif., in operating around the clock as part of a broader national effort to ease supply-chain logjams that have exacerbated shortages, stalled deliveries and raised prices ahead of the holidays.

  • Operating 24/7 would nearly double the number of hours cargo can move from the two ports that together receive 40% of the nation’s shipping containers. The International Longshore and Warehouse Union that represents dock workers agreed to the extra shifts.
  • “Today’s announcement has the potential to be a game changer,” but the goods won’t move by themselves, President Joe Biden said, urging retailers and freight companies to step up.
  • While major ports in Asia and Europe have operated 24/7 for years, the U.S. supply chain has struggled to adapt as businesses rushed to replenish pandemic-depleted inventories. Truckers have complained about restrictions on picking up and loading containers, and a shortage of truck drivers and warehouse workers is adding to the bottleneck.
  • Companies including Walmart , FedEx , United Parcel Service , Target and Samsung Electronics , and union representatives have committed to help, including increasing shipments at night through the end of the year.

What’s Next: Biden urged lawmakers to pass his $1 trillion infrastructure plan, saying it would invest in port improvements, expand domestic manufacturing of goods now made overseas, and increase U.S. resiliency against longstanding supply-chain weaknesses the pandemic has exposed.

Janet H. Cho

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Captain Kirk Finally Gets His Trip to the Final Frontier

William Shatner, the actor who played Captain James T. Kirk on Star Trek, got a real 10-minute trip to space on Wednesday aboard Jeff Bezos’ New Shepard rocket, becoming the oldest person to travel to space at 90 and the only Starfleet commander to do so.

  • “Everyone in the world needs to do this,” Shatner said outside the capsule after landing back on Earth. “I’m so filled with emotion about what just happened. It’s extraordinary. Extraordinary. I hope I can maintain what I feel now.”
  • The 60-foot-tall rocket reached about 600 miles an hour a minute into the flight. The capsule separated about three minutes in, reaching the edge of space in four minutes, where the passengers experienced a few minutes of weightlessness. The reusable rocket then returned to Earth.
  • Amazon.com founder Jeff Bezos, a lifelong Star Trek fan, gave Shatner the seat free. Audrey Powers, vice president of mission and flight operations for Bezos’ Blue Origin, was also on board with two paying customers, Planet Labs’ Chris Boshuizen and software executive Glen de Vries.

What’s Next: Blue Origin rival SpaceX (founded by Tesla CEO Elon Musk), is slated to launch its Falcon 9 rocket on Oct. 30, on a mission to take three U.S.-based astronauts and one from Europe to the International Space Station.

—Liz Moyer

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As the end of the year approaches, some investors will turn to tax-loss harvesting. But what do you need to know first about how the Internal Revenue Service ‘wash sale’ works—does it apply to cryptocurrency losses?

Stocks go up. Stocks go down. While they have mostly gone up so far this year, bull markets don’t last forever. And the price of a particular stock can fluctuate all over the lot regardless of the overall trend line.

When you make what turns out to be an ill-fated stock investment in a taxable brokerage firm account, the saving grace is that you can claim a tax-saving capital loss deduction (within limits) when you sell. Right? Not necessarily. In fact, the dreaded wash sale rule can disallow your tax savings.

Read more here.

Bill Bischoff

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—Newsletter edited by Liz Moyer, Mary Romano, Camilla Imperiali, Rupert Steiner