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General Electric
looks set to strike a multibillion-dollar deal—and its shares are rising. But it isn’t the only reason GE stock has been on the move.
Sunday, The Wall Street Journal reported GE and
AerCap
will combine their aircraft leasing portfolios. Historically, it’s been a pretty good business, but the pandemic has hurt. AerCap believes airlines will prefer leasing planes to owning them as the industry recovers.
Combined, the two lessors would have almost $80 billion in assets. GE declined to comment, but the market believes the deal will happen. AerCap stock is up more than 8% in premarket trading, while GE shares have gained almost 3%.
GE stock, up 30% this year, was on the move long before the deal. It’s benefitting from the vaccine, which helps the commercial aerospace business, GE’s largest. And higher interest rates—the 10-year Treasury yield is sitting just under 1.6%—help GE by making it easier to meet pension obligations.
High growth stocks don’t like high interest rates. They raise the cost of funding and make cash flow generated years from now worth less today. The
Russell 1000 Growth Index
has dropped 3% this year, while the
Russell 1000 Value Index
is up almost 7%.
Smart deals don’t hurt value stock performance, either.
—Al Root
*** Barron’s is honoring women across the industry for their leadership, accomplishments, and contributions. The 2021 list includes Lael Brainard, Thasunda Brown Duckett, Rupal J. Bhansali, and more. New profiles will be published weekly—see the full list and read the newest profiles here.
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Stimulus Bill Expected to be Signed Into Law This Week
The House is expected to vote Tuesday on the revised version of the $1.9 trillion Covid-19 rescue package that the Senate passed over the weekend. President Joe Biden says he hopes the bill will find “quick passage” so he can sign it into law.
- The House needs to vote again on the package, which it first passed in the early hours of Feb. 27, because the Senate version excludes the $15 minimum wage provision, narrows eligibility for stimulus payments, and lowers supplemental unemployment benefits from $400 to $300 a week, among other changes.
- If Biden signs the bill into law as soon as Tuesday after the House vote, the $1,400-per-person stimulus payments could begin arriving in people’s bank accounts within days, although some will receive paper checks or debit cards in the mail, which could take longer.
- Sen. Joe Manchin (D., W.Va.) who single-handedly managed to delay the Senate vote this past weekend over specifics on the supplemental unemployment benefits, told NBC’s “Meet the Press” on Sunday that he continues to support the filibuster because “it’s basically designed to make sure the minority [party] has input.”
What’s Next: Stimulus bill spending will increase the U.S. domestic product by $1 trillion, helping to spur U.S. economic growth, which is expected to lead the global economy’s 6% expansion in 2021, as forecast by Oxford Economics. Goldman Sachs pegs U.S. growth at 7% in 2021 after shrinking 2.3% in 2020.
—Janet H. Cho
***
Game Company Roblox Plans to Go Public This Week
One of the hottest public offerings of 2021 is just a few days away: Game company Roblox plans to go public “on or about” March 10, according to its filing with the Securities and Exchange Commission last month.
- Based in San Mateo, Calif., Roblox lets users create multiplayer games for free. It reported more than 32 million daily active users globally in 2020—half of whom are under age 13—and makes money by selling its virtual currency Robux, which players use to buy virtual pets, cars and avatars.
-
Unlike most public offerings, in which a company issues new shares, Roblox is opting for a direct listing.
Palantir,
Slack
and
Spotify
all went public this way. - Roblox was last valued at $29.5 billion in January, up from $4 billion in 2020, and $2.5 billion in September 2018. The company, which is not profitable, lost $253 million for the year ended Dec. 31.
What’s Next: Roblox nixed plans for a traditional IPO in January after the SEC approved a rule change from the New York Stock Exchange that allows companies to use direct floor listings to sell new shares and raise capital directly on the exchange without underwriters. It will trade under the ticker “RBLX.”
—Anita Hamilton
***
Oil Prices Surge After Attack on Saudi Oil Tanks
Prices of Brent crude briefly topped $70 a barrel on Monday after Saudi Arabia said it had been the target of a drone attack on its oil installations in Ras Tanura, the kingdom’s big shipping port.
- Yemen’s Iran-backed Houthi forces claimed responsibility for the attack, as well as for a missile sent over a compound in Dhahran used by Saudi Aramco, the state-controlled oil company.
- The Saudi energy ministry said that the attacks “did not result in any injury or loss of life or property.”
- Oil prices had already firmed up after a decision last week by OPEC and other major producers such as Russia to restrict output.
- Brent crude prices are back to their December 2019 level after falling to $24 lows in May last year due to the pandemic-induced global slowdown.
What’s Next: Even though the attacks failed to inflict damages on the kingdom’s oil installations, analysts note that geopolitical uncertainty now adds to the cartel’s supply curbs to consolidate prices at their current levels as the global economy heads for recovery.
—Pierre Briançon
***
Vaccinations—and Vaccine Disinformation—Are on the Rise
Even as the U.S. begins ramping up inoculations with its third approved coronavirus vaccine from
Johnson & Johnson,
President Joe Biden’s chief medical adviser Dr. Anthony Fauci continued to warn about easing restrictions. Russia, meanwhile, has embarked on a disinformation campaign about the safety of Western vaccines.
- Vaccine supply will “be dramatically increased” in April and May, Dr. Fauci told CBS’ “Face the Nation” on Sunday. He also warned against lifting restrictions as the 7-day average of new cases continues to hover around 65,000, saying, “it really would be risky to have yet again another surge.”
-
Some large employers have gotten permission to vaccinate their own employees, including
Fidelity,
Tyson Foods,
Exxon Mobil,
Caterpillar
and
Deere
—a move that saves workers the time and hassle of scrambling to find a vaccination site online or waiting for hours in a stadium parking lot. - As U.S. vaccinations increase, several websites linked to Russian intelligence services are spreading doubts about Western vaccines by playing up their side effects and suggesting the approval process was rushed. A Kremlin spokesman called claims that Russia was coordinating such coverage “nonsense.”
- Currently more than 90 million people in the U.S. have received a single dose of vaccine with 30 million, or 9% of the population, fully vaccinated, according to the Centers for Disease Control and Prevention.
What’s Next: At the current rate of more than 2 million shots a day, the U.S. could reach herd immunity with 70% to 85% of Americans vaccinated before the fall. Dr. Fauci has said high school students will start getting vaccinated this fall, and elementary school students by early next year.
—Janet H. Cho
***
Meghan Markle Says She Was Driven to Suicidal Thoughts
Questions raised within the royal family about their son’s skin color drove the wife of Prince Harry to have suicidal thoughts, the couple said Sunday night in a much-anticipated CBS interview with Oprah Winfrey.
- “I just didn’t want to be alive anymore,” Meghan Markle told Winfrey, evoking what she described as years of stress and isolation in London. She also faulted the royal household for not protecting her family against tabloid newspapers’s attacks and allegations.
- The couple declined to name the member of the royal household who had raised concern about the color of skin of their children. Markle’s mother is of African-American descent.
- In the two-hour interview, Harry, also known as the Duke of Sussex, said memories of his mother Diana’s unhappiness as royal princess also contributed to the couple’s decision to relinquish their royal duties and leave for California, where they now reside.
- He also said that relationships with his father Charles, who cut him off financially, and with his brother William had been damaged by the experience.
- According to The Wall Street Journal, CBS is paying a $7 million-to-$9 million fee for the interview, along with the rights to sell it globally. It is due to broadcast on Britain’s ITV channel Monday night. The couple was not paid for the interview.
What’s Next: Buckingham Palace is yet to respond to Markle and Harry’s accusations, and according to British newspapers the Queen let it be known that she wouldn’t watch the interview. In the week before the interview, allegations that Markle had once bullied Buckingham Palace staff were widely leaked in London’s newspapers.
—Pierre Briançon
***
MarketWatch Wants to Hear From You
How can lenders increase the Black home ownership rate to 60% by 2040? Researchers at the National Community Reinvestment Coalition have an answer.
A MarketWatch correspondent will answer this question soon. In the meantime, send any questions you would like answered to thebarronsdaily@barrons.com.
***
—Newsletter edited by Anita Hamilton, Stacy Ozol, Ben Levisohn
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