Daily Comment (June 29, 2021)

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA

[Posted: 9:30 AM EDT] | PDF

In today’s Comment, we open with a range of U.S. and global news regarding regulation and taxes, followed by various international political developments.  We conclude with our usual news update related to the coronavirus pandemic, including important new research indicating that it’s okay to mix different types of vaccines.

U.S. Technology Industry:  Although we’ve talked a lot about rising antitrust scrutiny and increased regulatory risks for big U.S. technology firms, it’s important to remember those firms will win some of their battles.  Yesterday, a U.S. district judge in Washington dismissed a series of federal and state antitrust suits against Facebook (FB, $355.64) on the grounds that they didn’t plead enough allegations to support monopolization claims, and the state attorneys general waited too long to bring their claims.

  • Despite the industry’s win in this battle, it will still have much work ahead to avoid losing the regulatory war it is facing.
  • Indeed, the federal suit dismissed yesterday can be amended and refiled within 30 days, and big tech firms still face a range of regulatory attacks all over the world.  For technology investors, that means regulatory risk will likely remain a risk for the time being.

U.S. Banking Industry:  Now that the Federal Reserve has loosened restrictions on payouts, several large U.S. banks yesterday announced they would hike their dividends.  The hikes announced yesterday should amount to approximately $2 billion in the coming quarter alone.

Global Minimum Corporate Tax:  The G7’s proposal for a global minimum tax of 15% on corporations is already hitting obstacles as negotiators try to get the entire G20 grouping to sign on to it.  Negotiators have become increasingly concerned that the compromises needed to get countries on board will water down the final agreement.

  • Major countries resisting the deal include China, India, many other developing countries in Eastern Europe and beyond, and tax havens such as Switzerland and Ireland.
  • The proposal is set to be discussed by finance ministers from the G20 group of countries at a summit in Venice next month.

Global Commodity Markets:  Prices for a wide range of commodities continue to correct after their big run-up during the spring, and not only because of the Federal Reserve’s recent hint that it might tighten monetary policy somewhat earlier than previously thought.  Now, U.S. hog prices are tumbling in response to the Chinese government’s declaration that it has rebuilt the hog herds devastated by an outbreak of African swine fever in 2018.  The most active hog futures contract on the CME recently fell below $1.00 per pound for the first time since March.

Germany:  In an interview with the Financial Times, Finance Minister Olaf Scholz tried to thread a very narrow needle by supporting continued high levels of fiscal stimulus next year.  But, he is also insisting that there is no need to loosen EU or German restrictions on spending and debt.  Scholz is the center-left Social Democrats’ candidate for chancellor in September’s federal election.

China-Russia:  Presidents Xi and Putin have agreed to extend the 20-year-old friendship treaty between their two countries, marking another step toward greater alignment between Beijing and Moscow and heightening their ability to compete against the U.S. and its liberal democratic allies.

Japan-China-Russia:  Japanese Deputy Defense Minister Yasuhide Nakayama has warned of the growing threat posed by Chinese and Russian collaboration.  He said it was necessary to “wake up” to Beijing’s pressure on Taiwan and protect the island “as a democratic country.”  Nakayama even questioned whether the U.S., Japan, and other countries should have ever recognized Beijing and its “One China” policy over Taipei.  The remarks are sure to generate condemnation by China and could lead to more significant disruptions in the Japan-China relationship.

Ethiopia/Tigray:  Rebels in the Tigray region have routed federal forces and taken control of the regional capital of Mekelle.  The interim regional administration installed by Addis Ababa has fled, and the federal government has called for a ceasefire.  However, now that the rebels appear to have momentum, they are unlikely to accept a truce and will probably keep pushing their advantage, which could lead to further instability in the horn of Africa.

COVID-19:  Official data show confirmed cases have risen to 181,497,289 worldwide, with 3,931,610 deaths.  In the United States, confirmed cases rose to 33,641,386 with 604,152 deaths.  Vaccine doses delivered in the U.S. now total 381,282,720, while the number of people who have received at least their first shot totals 179,615,165.  Finally, here is the interactive chart from the Financial Times that allows you to compare cases and deaths among countries, scaled by population.


  • The latest CDC data shows, 54.1% of the U.S. population has now received at least one dose of a vaccine, and 46.3% of the population is fully vaccinated.
  • As the European Union’s mass vaccination programs finally hit their stride and the U.S. program continues to slow, many EU countries are on the verge of surpassing the U.S. in terms of the share of their population having received at least one shot.  A faster increase in vaccination rates is seen as essential in containing the more deadly, highly transmissible Delta variants of the virus.
  • According to a new study, alternating a dose of the vaccine from Pfizer (PFE, $39.12) with a dose of the vaccine from AstraZeneca (AZN, $60.07) is safe and provides a strong immune response against COVID-19.  The research supports the idea of mixing different vaccine types, which is already being done in some countries.  In turn, that could help ease the logistical challenges in vaccinating people.

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