After Hours Summary: HPK +9.6% pops high on strategic alternative review; YEXT +3.5% higher on workforce reductionAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: FNB +5%
Companies trading higher in after hours in reaction to news: HPK +9.6% (announces strategic alternative review, including possible sale; also provides operational guidance), CBAY +6.7% (commences stock offering), CDLX +4.5% (names new COO), CTV +3.9% (announces 10% workforce reduction), YEXT +3.5% (announces cost cut plan, includes 8% workforce reduction), CDXS +2.8% (names new CFO), PLRX +2.6% ($175 mln stock offering), ELV +0.6% (to acquire Blue Cross and Blue Shield of Louisiana), CPRI +0.3% (names new CEO of Michael Kors brand), INTC +0.1% (new independent chair)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: ZION -4%, BRO -3.9%, CR -3.8%, IBTX -0.4%, HOPE -0.2%
Companies trading lower in after hours in reaction to news: PFLT -6.3% (stock offering), ENVX -1.5% (CTO to retire), ENTG -1.3% (CFO to retire)
Closing Stock Market SummaryEquities logged sizable gains today, building on Friday's rally. Upside moves had the S&P 500 extend its position above its 200-day moving average (3,966) and close the session comfortably above the 4,000 level.
The positive bias seemed to be partially fueled by the notion that the U.S. economy may achieve a soft landing. That narrative was fueled by a Wall Street Journal article over the weekend by Nick Timiraos highlighting the possibility of the Fed pausing its rate hikes this spring, along with a recent survey of businesses by the NABE that conveyed a lower possibility (56% vs nearly two-thirds before) of the U.S. being in a recession or entering one.
Buying interest in the mega cap space was an important factor behind today's gains. Tesla (TSLA 143.75, +10.33, +7.7%) was among the more notable standouts in that regard ahead of its earnings report after the close on Wednesday. The Vanguard Mega Cap Growth (MGK) rose 1.7%.
S&P 500 sector performance reflected mega cap leadership. The information technology (+2.3%), communication services (+1.8%), and consumer discretionary (+1.6%) sectors led the outperformers.
The energy sector, meanwhile, was alone in negative territory by the close with a 0.2% loss.
Semiconductor stocks were a specific pocket of strength today. This followed upgrades of Adv. Micro Devices (AMD 76.53, +6.46, +9.2%), Qualcomm (QCOM 131.03, +8.13, +6.6%) and Skyworks Solutions (SWKS 109.61, +6.55, +6.4%) to Overweight from Equal Weight at Barclays. Notably, semiconductor equipment companies Applied Materials (AMAT 114.15, +4.51, +4.1%) and KLA Corp (KLAC 425.58, +11.73, +2.8%) came along for the rally despite being downgraded to Equal Weight from Overweight at Barclays. The PHLX Semiconductor Index rose 5.0%.
Although the main indices all registered decent gains today, there was pullback from session highs in the afternoon trade. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average were up 1.7%, 2.4%, and 1.2%, respectively, at their highs of the day.
The downturn coincided with many stocks giving back some gains. The Invesco S&P 500 Equal Weight ETF (RSP) settled the session up 1.3% after reaching a 1.7% gain at its intraday high.
There may have been some short-covering activity driving today's gains as earnings season ramps up with the likes of Microsoft (MSFT 242.58, +2.36, +1.0%) and Tesla (TSLA) also reporting later this week.
Market participants also receive key economic data later this week, including the advanced Q4 GDP reading on Thursday followed by the Personal Income and Spending report for December on Friday, which includes the Fed's preferred inflation gauge in the form of the core-PCE Price Index.
- Nasdaq Composite: +8.6% YTD
- Russell 2000: +7.4% YTD
- S&P Midcap 400: +6.6% YTD
- S&P 500: +4.7% YTD
- Dow Jones Industrial Average: +1.5% YTD
Economic data today was limited to the Leading Indicators for December, which fell 1.0% (consensus -0.7%) following a revised 1.1% decline in November (from 1.0%).
Ahead of tomorrow's open, Verizon (VZ), Johnson & Johnson (JNJ), General Electric (GE), Lockheed Martin (LMT), Raytheon Technologies (RTX), Travelers (TRV), 3M (MMM), Danaher (DHR), PACCAR (PCAR), D.R. Horton (DHI), Union Pacific (UNP), and Halliburton (HAL) are among the more notable earnings reporters.
Looking ahead to Tuesday, market participants will receive the preliminary IHS Markit Manufacturing PMI (prior 46.2) and Services PMI (prior 44.7) for January at 9:45 a.m. ET.
(EU) ECB chief Lagarde: Inflation in Europe is far too high; Rates still have to rise significantly
- We have made it clear ECB rates will still have to rise significantly at a steady pace
- ECB will stay course to restore inflation goal
- major economies – led by the United States and China – are now increasingly using trade to limit the ambitions of geopolitical rivals. That could fragment world trade with potentially huge costs.
- These geopolitical winds are reshaping the second feature of this new map: supply. We are seeing strategic considerations becoming increasingly important in where suppliers are located.
- Missio is only accomplished when inflation back at 2%
- Full text of speech: https://www.ecb.europa.eu/press/key/date/2023/html/ecb.sp230123_1~2d9786eedf.en.html
Sotheby’s to Auction Rare The Notorious B.I.G. Air Jordans
The auction house is selling 23 pairs of the unreleased Christopher Wallace Air Jordan 13 that was first created in 2017.
Sotheby’s and the Jordan Brand are teaming up for a rare sneaker auction.
The auction house is working with the fashion brand to sell 23 pairs of the unreleased Christopher Wallace Air Jordan 13, which was created in 2017 to celebrate what would have been The Notorious B.I.G.’s 45th birthday. Jordan collaborated with the Christopher Wallace Memorial Foundation to auction the sneakers.
The online auction starts on Monday and runs through Feb. 3 and the sneakers are estimated to sell for $2,300 to $5,200. Proceeds from the sale will benefit the Christopher Wallace Memorial Foundation, which supports inner city youth through educational opportunities, scholarships and mentorship.
“The Air Jordan 13 has been reinterpreted to celebrate the legacy of The Notorious B.I.G., someone who reached for the stars, had the boldest of dreams with the work ethic to back it up,” said Reggie Saunders, vice president of entertainment marketing for Jordan Brand in a statement.
The black Air Jordan 13 sneakers are designed with an image of the rapper on the tongue and his famous quotes, such as, “It was all a dream” and “If you don’t know, now you know.” The sock liner is designed in a classic red and black plaid print and the shoelaces are inscribed with the word “dream.”
“We are thrilled that the Jordan Brand and the Christopher Wallace Memorial Foundation have entrusted Sotheby’s with these exclusive pairs of sneakers honoring the legacy of The Notorious B.I.G. as part of the Jordan Year 2023 celebration,” said Sotheby’s head of streetwear and modern collectibles Brahm Wachter. “The auction marks the only opportunity for collectors and enthusiasts alike to acquire these special limited-edition sneakers that bring together the legacies of the greatest athlete of all time with the greatest rapper ever.”
The auction coincides with Jordan Brand’s #JordanYear 2023 campaign, which reflects Michael Jordan’s number 23 jersey and is also meant to celebrate the 50th anniversary of hip-hop. Other major brands like H&M have featured images of the musician’s likeness in recent seasons. Sotheby’s knows firsthand how the Jordan name carries its own clout and fan base. A pair of Jordan-worn sneakers by the NBA legend during his rookie season sold for a whopping $1.47 million at the auction house in 2021.
“This is just the beginning of a journey for us as a brand in 2023,” said Shannon Watkins, chief marketing officer at Jordan Brand, in a statement. “We want to use the power of our Jordan heritage to energize and accelerate self-belief all year long.”
The Air Jordan 13 sneakers will be showcased in a public exhibition at Sotheby’s New York gallery during the online auction.
Another sign of Wallace’s lasting impact is evident in the “Sky’s the Limit in the County of Kings,” a 9-foot interactive statue of the late musician that was unveiled last month in Clumber Corner Park in Brooklyn’s DUMBO neighborhood. Made possible through the Downtown Brooklyn and DUMBO Public Art Fund, the likeness of “Biggie” was created by the artist Sherwin Banfield. It depicts him the musician in a Coogi sweater and crown, and features an audio component. Like the Sotheby’s triumvirate effort, the statue is a nod to hip-hop’s silver anniversary, and it will remain on view until October. H&M is among the brands that have used his name and image for men’s apparel in recent seasons.
Asked about The Notorious B.I.G.’s lasting appeal, Banfield said the hip-hop culture recognizes his authenticity, genius, heart and potential. “His authenticity mirrors the roots of hip-hop, the voice of the voiceless, of disenfranchised Black and brown youth who put their personal stories of hardship and fun on record. There is a relatable human experience in that duality. His genius is recognized in his art; his delivery, cadence, rhyme pattern and style is the highest level of storytelling in the spoken word tradition. His heart was huge; his family, friends and community can attest to this,” the artist said, adding that “the heartbreaking understanding of what his maturing creative and community contribution could have offered the world” was another factor. “We see the maturity and successes of his contemporaries and we recognize he would have been as or more impactful if he was still here. So we celebrate what he was able to offer as his legacy.”
Mets owner Steve Cohen’s hedge fund Point72 reaps $2.4B windfall
New York Mets owner Steve Cohen’s Point72 hedge fund generated more than $2.4 billion in profits for investors last year.
Point72, whose headquarters are located in Stamford, Conn., posted a 10.3% net gain in 2022 despite economic headwinds, according to data from LCH Investments, which was cited by Financial Times.
Cohen, whose net worth has been valued by Bloomberg at nearly $13 billion, pocketed $1.7 billion in personal capital gains from his hedge fund, according to Institutional Investor.
Cohen’s investment firm makes its money through what is known as a long-short equity strategy. In other words, Point72 takes a long position on underpriced stocks while selling short positions on securities that are overvalued.
According to Institutional Investor, Point72 made most of its money by betting against equities and betting that interest rates would rise. The Federal Reserve has been aggressive in hiking interest rates as part of a strategy to tame record levels of inflation.
Cohen’s windfall from 2022 should be reassuring to Mets fans who have been ecstatic with his aggressive signing of high-priced free agents.
The Mets added Cy Young Award winner Justin Verlander to its pitching staff, signing him away from the Houston Astros.
Cohen, who bought the Mets from the Wilpon family for $2.4 billion in 2021, nearly snagged star short stop Carlos Correa, but questions about the slugger’s ankle injury raised doubts among Mets management that he was worth the 12-year, $315 million investment.
Point72 was indirectly victimized by the “meme stock” craze which put a squeeze on short-sellers such as Melvin Capital, a hedge fund that counted Cohen’s firm as one of its investors.
Melvin Capital lost an eye-popping $6.8 billion — more than half of its assets under management — in January 2021, when retail investors banded together on Reddit and bought up shares of distressed stocks such as AMC and GameStop — artificially inflating the share prices.
Hedge funds and other short-sellers were thus forced to buy up more shares of the distressed stock in order to cover their bets — causing a spike in the stock price.
Point72 invested $750 million in Melvin Capital. Cohen’s firm redeemed the investment in March of last year.
Users on the Reddit board “WallStreetBets” openly targeted Cohen and his fund on the platform with one taunting “Mets owners and losing all their money in the stock market. Name a more iconic duo.”
Cohen, who has upended Major League Baseball with his record-high spending spree that has catapulted the Mets’ payroll to the stratosphere, founded Point72 in 1992.
The firm, which has $26.7 billion in assets under its management, is the successor to Cohen’s SAC Capital Advisors, which in 2014 pleaded guilty to federal insider trading charges and paid a $1.8 billion fine.
Former FBI agent charged with helping Oleg Deripaska evade sanctions
US prosecutors allege agent and court interpreter assisted Russian oligarch by investigating rival and laundering money
A former high-ranking FBI agent and US court interpreter have been charged with violating US sanctions by helping Russian oligarch Oleg Deripaska investigate a rival and engaging in money laundering.
Charles McGonigal, who previously served as special agent in charge of counter-intelligence at the FBI’s New York office and who had probed Deripaska, and Sergey Shestakov, a Russian diplomat turned US citizen and court interpreter, were arrested on Saturday evening, the Department of Justice said on Monday.
“They both previously worked with Deripaska to attempt to have his sanctions removed, and, as public servants, they should have known better,” Damian Williams, the US attorney for the Southern District of New York said.
Deripaska, who made his fortune in metals, was first sanctioned by the US in 2018, in response to Russia’s earlier annexation of Ukraine’s Crimea.
McGonigal, who retired from the FBI in 2018, agreed in 2021 to “investigate a rival Russian oligarch in return for concealed payments from Deripaska”, the DoJ said.
He worked for the sanctioned oligarch both via a law firm and directly, prosecutors said, and engaged in a “soup to nuts” investigation of the unnamed rival. McGonigal was paid tens of thousands of dollars for his services, they alleged.
The 54-year-old McGonigal and 69-year-old Shestakov also attempted to get the sanctions against Deripaska lifted in 2019, prosecutors said.
Shestakov, who was a New York-based diplomat for both Soviet and post-Soviet Russia, had remained in the US to work as a Russian interpreter in federal courts, including in the storied southern district of New York, where the case against him will be heard.
If convicted, McGonigal could face a maximum of 80 years in prison, while Shestakov could face 85 years.
“Russian oligarchs like Oleg Deripaska perform global malign influence on behalf of the Kremlin and are associated with acts of bribery, extortion, and violence,” Michael Driscoll, the FBI’s assistant director in charge, said in a statement.
A representative for Deripaska did not immediately respond to a request for comment.
Deripaska is one of the few oligarchs to have spoken out against Vladimir Putin’s invasion of Ukraine, which he has called “madness” and a “colossal mistake” even while avoiding direct criticism of the Russian president.
But his clashes with the Kremlin over the war have done little to mend his longstanding and hostile relationship with western authorities.
US authorities charged Deripaska and his associates in September with violating sanctions, while Ekaterina Voronina, Deripaska’s girlfriend, was charged with making false statements to US authorities as she attempted to enter the country to give birth to the couple’s child.
Graham Bonham-Carter, a British businessman who worked for Deripaska was arrested in London the following month, after being charged by US authorities for allegedly assisting his boss in evading sanctions.
Deripaska faces separate legal proceedings in the UK, where he is being accused of being in contempt of court.
Ofgem warns energy suppliers to help struggling customers or face penalties
UK regulator to investigate companies forcibly switching households on to prepayment meters
The UK energy regulator Ofgem is to investigate suppliers forcibly switching vulnerable customers to prepayment meters.
Jonathan Brearley, chief executive of Ofgem, said on Monday that the regulator did not have legal powers to completely ban forced installations of prepayment meters but it would examine companies’ “checks and balances” and act against those who “do not take due care”.
Most customers pay for their power after use but energy providers can force people on to more expensive prepaid meters when they fall behind with regular payments.
The number of people who have been moved on to prepayment tariffs has risen sharply as they grapple with soaring energy bills and the cost of living crisis.
Brearley’s comments came after Grant Shapps, the business secretary, told suppliers over the weekend that they should voluntarily end the practice of switching households to prepayment metres or face being “named and shamed”.
Speaking at an event held by the Institute of Government think-tank, Brearley also called for a “serious assessment” of a cheaper social tariff for low-income households, which would mean those that are least able to pay are charged a lower price for their power.
Current rules require suppliers to explore the financial help on offer or carry out appropriate assessments before they can forcibly install prepayment meters or remotely switch a household’s smart meter to a pre-pay tariff.
But Brearley said some people were being moved “without even knowing about it”. He cited an example of a customer in Glasgow who “left to go on holiday and returned to find he’d been switched to pre-pay without his knowledge and had no way to top up”.
“Although there is good practice in many places, no company came through [in initial investigations] without needing to improve and all have been required to submit plans to meet the standards we set,” Brearley said.
The government has introduced an energy price guarantee scheme aimed at restricting a typical household bill to about £2,500 a year until the end March, and to around £3,000 until spring 2024.
Although wholesale gas prices have been falling, Brearley said it was unlikely that prices would return to pre-pandemic levels and that new approaches were needed in Britain’s energy sector.
Shapps has written to energy suppliers telling them they are not doing enough to help vulnerable households and should be offering credit or debt advice, with pre-pay installations a last resort.
Citizens Advice, the consumer lobby group, said last month that 3.2mn people across the UK ran out of credit on their prepayment meter last year because they could not afford to top up.
One in five prepayment meter customers last year spent at least 24 hours without gas or electricity, leaving them unable to turn the heating on or cook a hot meal, the group found.
Energy UK, which represents the industry, said: “Suppliers are already required to have exhausted all other options before installing a prepayment meter by warrant.
“Only after repeated unsuccessful attempts to contact the customer to discuss repayment options and offer support and after checks to ensure they do not go ahead when customers are in the most vulnerable situations.”
Qatar Investment Authority doubles stake in Credit Suisse
Move comes as two big US investors sell down their shares in the Swiss lender
The Qatar Investment Authority has doubled its stake in Credit Suisse, becoming the second-biggest shareholder after the Saudi National Bank and underlining the growing importance of Middle Eastern investors to the ailing Swiss bank.
The move comes as US shareholders sell down their stakes in the lender, with Chicago-based Harris Associates, which was the bank’s biggest shareholder just a few months ago with a 10 per cent stake, now owning less than 5 per cent.
The QIA, which began investing in Credit Suisse during the financial crisis, doubled its stake in the group late last year and now owns slightly less than 7 per cent of stock, according to a filing on Friday with the Securities and Exchange Commission.
Together with the SNB’s 10 per cent stake and 3 per cent held by the Olayan family of Saudi Arabia, the three Middle Eastern investors control more than a fifth of Credit Suisse stock.
Buffeted by a succession of crises, the Swiss bank launched a capital raise in October aimed at drawing in an additional SFr4bn ($4.3bn) from new and existing shareholders to pay for a radical restructuring of the group.
The Financial Times reported last year that the QIA would be joining the SNB as part of the initial share sale and both would take part in a subsequent rights issue.
The petrodollar-fuelled boom over the past decade has boosted the coffers of Gulf sovereign wealth funds, with investors in the region looking to build positions in a range of western financial groups and sports teams.
Last year, First Abu Dhabi Bank hired Citigroup and Moelis to explore potential international takeovers or investments and considered a deal to buy UK-listed bank Standard Chartered.
In a statement earlier this month, FAB said it “had previously been at the very early stages of evaluating a possible offer for Standard Chartered” but was “no longer doing so”.
The Credit Suisse leadership has been courting Middle Eastern investors and wealthy clients in recent years, having identified the region for growth. Chair Axel Lehmann was a guest of the Qatari government during the World Cup final in December, which was held in Doha.
Harris Associates is not the only US investor to sell down its Credit Suisse stake. Artisan Partners, which last year was a top five shareholder and bought into the group soon after the appointment of former chair António Horta-Osório, has completely sold out over the past six months.
Credit Suisse shares have dropped more than 70 per cent over the past two years.