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Stock futures gain after better-than-expected earnings from big retailers



U.S. stock index futures gained after better-than-expected results from Walmart and Home Depot.

Futures contracts tied to the Dow Jones Industrial Average, which contains the two big retailers, added 76 points, or 0.2%. S&P 500 futures gained 0.1%. Nasdaq 100 futures were slightly in the green.

Walmart kicked off a busy week of retail earnings by saying third-quarter profit and revenue was well above estimates with U.S. same-store sales jumping 9.2%, excluding fuel. The company also raised its forecast for 2021, saying adjusted earnings per share will be around $6.40 versus its prior expectations of between $6.20 and $6.35. The shares were higher by nearly 2% in premarket trading.

Home Depot‘s third-quarter earnings beat estimates on a 9.8% sales burst. Shares gained 1.5% in premarket trading.

A slew of economic data will be released on Tuesday, including retail sales figures for October. Economists surveyed by Dow Jones are expecting sales to have jumped by 1.5% last month, compared with 0.7% in September. Industrial production numbers will also be released, as well as the NAHB housing market index survey.

During regular trading Monday, the Dow dipped about 13 points, or 0.04%, for its fourth negative session in the last five. At the high of the day the 30-stock index gained about 136 points. The S&P 500 finished the day unchanged at 4,682.87. The benchmark index moved between gains and losses during the session, at one point gaining 0.3%, while also trading 0.21% lower. The Nasdaq Composite dipped 0.04%. The Russell 2000 was the relative underperformer, declining 0.45%.

Stocks’ move came as interest rates rose, with the yield on the 10-year Treasury note topping 1.62% while the 30-bear Treasury bond rose above 2%.

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Inflation fears are weighing on the market after last month’s consumer price index posted its largest annual increase in more than three decades. Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, said he believes inflation will moderate in 2022, but that “the path to lower inflation [will] begin with higher inflation in the front half of the year.”

“The stickier drivers of inflation are likely to persist, but our base case is that they will not outweigh the improvement we expect in the transitory elements,” he wrote in a note to clients.

On Monday afternoon President Joe Biden signed the $1 trillion bipartisan infrastructure bill into law. The package includes funding for transportation, broadband and utilities.

The major averages are coming off their first negative week in six, but stocks are still trading around all-time high levels. As Wall Street strategists look to 2022 some, including Morgan Stanley’s Michael Wilson, believe the picture looks muted.

“With financial conditions tightening and earnings growth slowing, the 12-month risk/reward for the broad indices looks unattractive at current prices,” he said Monday in a note to clients. “However, strong nominal GDP growth should continue to provide plenty of good investment opportunities at the stock level for active managers,” he added. His 12-month base target for the S&P 500 is 4,400, which is 6% below where the index closed on Monday.

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Salesforce promotes Bret Taylor to co-CEO



Bret Taylor, president and chief product officer for Inc., speaks during the opening keynote of the 2019 Dreamforce conference in San Francisco on Nov. 19, 2019. Salesforce’s annual software conference, where it introduces new products and discusses its commitment to social causes, was interrupted for the second year in a row by protests against the company’s work with the U.S. government.

David Paul Morris | Bloomberg | Getty Images

Salesforce on Tuesday promoted Bret Taylor to the role of co-CEO, alongside Marc Benioff, who co-founded the company in 1999.

Taylor joined Salesforce in 2016, through the $412 million acquisition of his productivity software start-up Quip, which he co-founded four years earlier. Taylor quickly moved up the ranks to become president and chief product officer, and he now participates in quarterly earnings calls with analysts.

“Bret is a phenomenal industry leader who has been instrumental in creating incredible success for our customers and driving innovation throughout our company,” Benioff said, in a press release announcing the promotion. “Together, Bret and I will lead Salesforce through our next chapter, while living our shared values of trust, customer success, innovation and equality for all.”

Before starting Quip, Taylor helped create Google Maps, sold social networking start-up FriendFeed to Facebook, and spent three years as Facebook’s technology chief. Taylor sits on Twitter’s board of directors, and on Monday was named chairman as part of Jack Dorsey’s departure as CEO.

Salesforce is the largest employer in San Francisco, drawing tens of thousands of attendees each year to its Dreamforce conference, where Benioff expounds on business trends. Benioff regularly engages in politics, directs money to philanthropic causes and, with his wife, Lynne, acquired ownership of Time Magazine from Meredith Corp in 2018.

The last time Benioff named another CEO of Salesforce came in 2018, when former Oracle executive Keith Block became co-CEO alongside Benioff. But Block stepped down less than two years later, and Benioff removed the “co” from his title.

Taylor told people he was expecting to get the CEO job soon, the Information reported on Oct. 7.

“Marc has been my mentor, my greatest supporter and my trusted friend for years,” he said in Tuesday’s statement. “Partnering with him to lead the company he co-founded 22 years ago is an enormous privilege.”

Salesforce has expanded beyond its core of providing cloud-based software for sales reps, with products for customer service, marketing and commerce. Acquisitions of MuleSoft, Tableau and most recently Slack have also helped Salesforce grow.

Last year, Slack CEO Stewart Butterfield told Taylor that Slack was interested in acquiring Quip from Salesforce. Taylor told Butterfield that wasn’t happening, but he later brought up the idea of Salesforce buying Slack, according to a regulatory filing. The $27.1 billion deal closed in July.

WATCH: Jim Cramer’s interview with Marc Benioff

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Climate change and geopolitical instability: 11 high-risk countries



Residents use a boat to move in a flooded neighbourhood in Kareli Gaus Nagar area of Allahabad on August 12, 2021 following heavy monsoon rainfalls that caused the overflowing of the Ganges and Yamuna Rivers.

Sanjay Kanojia | AFP | Getty Images

WASHINGTON – The nation’s collective intelligence community identified 11 countries vulnerable to geopolitical instability due to climate change in its first-ever National Intelligence Estimate on Climate Change report.

According to the report, Afghanistan, Burma, Colombia, Guatemala, Haiti, Honduras, India, Iraq, Nicaragua, North Korea and Pakistan are likely to face a slew of extreme weather episodes that pose threats to energy, food, water and health security.

“Diminished energy, food and water security in the 11 countries probably will exacerbate poverty, tribal or ethnic intercommunal tensions and dissatisfaction with governments, increasing the risk of social, economic, and political instability,” said the report from the Office of the Director of National Intelligence, which oversees the nation’s 18 intelligence agencies.

More generally, “intensifying physical effects will exacerbate geopolitical flashpoints, particularly after 2030, and key countries and regions will face increasing risks of instability and need for humanitarian assistance,” the report said.

The report outlines a number of scenarios:

  • Rising temperatures and increased precipitation may amplify mosquito and diarrheal disease outbreaks in South Asian and Central American countries, worsening health outcomes and causing additional loss of life.
  • More frequent and intense cyclones are likely to contaminate water sources, with scientific models suggesting dengue incidence will likely increase in Afghanistan, Guatemala, Haiti, Honduras, India, Iraq and Pakistan.
  • Climate change will likely accelerate the loss of biodiversity leading to more extinctions of plants and animals that can no longer survive in their traditional habitats and risking ecosystems that global populations rely on for food and medicine.
  • Prolonged dry spells followed by excessive rainfall have devastated maize and bean crops in Central America. Yields for these and other crops in Guatemala, Honduras, and Nicaragua are projected to decline significantly, raising the prospect of food insecurity and a drop in crucial export commodities.

The report adds that the 11 countries are most likely to lack financial resources and governance capacity to adapt to climate change effects.

“Foreign governments, international institutions, and private investment can offer financial aid, technical expertise, and climate adaptation technologies to alleviate some of these difficulties — such as food and water insecurity and urban poverty — but in the 11 countries, these efforts are likely to be hindered by poor governance, weak infrastructure, endemic corruption, and a lack of physical access,” the report said.

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Why Apple is the only tech stock that’s up today



Apple CEO Tim Cook attends the Allen & Company Sun Valley Conference on July 08, 2021 in Sun Valley, Idaho.

Kevin Dietsch | Getty Images

Apple stock was up more than 2% on Tuesday as stocks tumbled on concerns of the new omicron Covid variant, showing investors see the company as a safe haven during market uncertainty.

Other large market cap tech stocks like Google, Amazon, Meta (formerly Facebook) and Microsoft are down for the day amid a broader market selloff. The Dow Jones Industrial Average dropped more than 500 points, the Nasdaq composite was down over 1% and the S&P 500 was down about 1.4% on Tuesday.

Needham analyst Laura Martin told CNBC that investors turned to Apple on Tuesday because the company has prodigious cash flow, allowing it to endure any slowdowns in the economy and take advantage of falling prices.

“There’s a flight to quality with companies that you know will weather the storm, not go bankrupt, not have financial distress,” Martin said, noting that other large-cap tech stocks aren’t down as much as smaller firms.

Martin added Apple is positioned to introduce new products to power new growth, including a headset.

“The biggest criticism of Apple for the last five years is no new products. When you look at the product pipeline, lots of excitement there, especially in the press today about how they’re going to introduce augmented reality glasses at the next WWDC in June,” Martin said.

Martin said there are indications that Apple’s current products, especially its iPhone Pro models, are selling well, potentially leading to a big December quarter for the company. Apple said in October it expected record revenue in its fiscal first quarter, over last year’s $111.4 billion in sales, despite supply constraints.

“Lots of really good numbers coming out of retail about how the products are selling. Tablets, especially the high-end iPhones, all of which says they’re going to have high margins and high revenue for the fourth quarter of this year,” Martin said.

Apple uses its cash flow not only to invest in new products but to return capital to shareholders through dividends and buybacks, the latter of which can help keep the stock price stable. And Bernstein analyst Toni Sacconaghi said in a note to investors earlier this month that he expects Apple to continue repurchasing shares over the next five years.

“Our analysis suggests that Apple is likely to be able to continue repurchasing ~ 3-4% of its shares per year until the end of 2026 while growing its dividend per share by 10% annually without taking on net debt on its balance sheet,” Sacconaghi said in a Nov. 17 note to investors.

Shares of Apple are up about 25% for the year.

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