Closing Stock Market SummaryToday, the stock market was able to build on yesterday's gains with added interest in the higher growth areas. The market opened modestly lower before finding momentum to the upside. There was a quick dip when a report came out suggesting Alphabet's Google (GOOG 114.70, +0.08, +0.1%) is going to pause hiring for two weeks. The market took the news in stride and the knee jerk selling interest soon shook off with the indices moving back to the highs by late afternoon.
The mega caps did some heavy lifting today with the Vanguard Mega Cap Growth ETF (MGK) closing up 1.5% versus a 0.6% gain in the S&P 500 and a 0.7% gain in the Invesco S&P 500 Equal Weight ETF (RSP).
The interest in high growth areas could be seen in the S&P 500 sector performance. Communication services (+1.0%), information technology (+1.6%), and consumer discretionary (+1.8%) were some of the best performers on the day thanks, in part, to their respective mega cap components: Meta Platforms (META 183.09, 7.31, +4.2%), Apple (AAPL 153.04, +2.04, +1.4%), and Amazon.com (AMZN 122.77, +4.56, +3.9%).
Communication services was also bolstered by Netflix's (NFLX 216.46, +14.83, +7.4%) outsized gains after the company had better-than-expected Q2 results and lost "only" 970,000 subscribers, which was half the estimated amount.
As for the laggards, the countercyclical sectors, utilities (-1.4%), consumer staples (-0.7%), and health care (-1.1%), led the underperformers.
The health care sector had a rough go today after a few components, which reported earnings this morning, sold off heavily. Elevance Health (ELV 459.54, -37.89, -7.6%), Biogen (BIIB 207.49, -12.77, -5.8%), and Abbott Labs (ABT 108.23, -1.70, -1.6%) were all down big despite beating earnings and revenue estimates and issuing above-consensus guidance.
With buyers favoring growthy areas, the Russell 3000 Growth Index (+1.2%) outpaced the Russell 3000 Value Index, which closed up 0.4%.
The 2-yr note yield rose two basis points to 3.24% and the 10-yr note yield rose two basis points to 3.04% after testing 2.94% in early morning action.
The earnings reports ahead of tomorrow's open will be headlined by American Airlines (AAL), AT&T (T), AutoNation (AN), Blackstone (BX), D.R. Horton (DHI), Danaher (DHR), Dow (DOW), Freeport-McMoRan (FCX), Nucor (NUE), SAP SE (SAP), Tractor Supply (TSCO), Travelers (TRV), Union Pacific (UNP).
Thursday's economic data includes weekly initial jobless claims (Briefing.com consensus 240,000; prior 244,000), continuing claims (prior 1.331 million), and July Philadelphia Fed Index (Briefing.com consensus -1.2; prior -3.3) at 8:30 ET; June Leading Economic Index (Briefing.com consensus -0.5%; prior -0.4%) at 10:00 ET; and Weekly EIA Natural Gas Inventories (prior +58 bcf) at 10:30 ET.
Today's economic data includes:
- Existing home sales decreased 5.4% month-over-month in June to a seasonally adjusted annual rate of 5.12 million (consensus 5.40 million) versus 5.41 million in May. Total sales in June were down 14.2% from a year ago.
- The key takeaway from the report is that the supply of available homes for sale remains extremely tight, yet higher mortgage rates and home price inflation are contributing to a slowdown in buyer demand rooted in affordability pressures that are expected to persist.
- Crude oil inventories had a draw of 446K barrels
- Prior week showed a build of 3.25 mln barrels
- Gasoline inventories had a build of 3.50 mln barrels
- Prior week showed a build of 5.83 mln barrels
- Dow Jones Industrial Average: -12.3% YTD
- S&P 400: -15.6% YTD
- S&P 500: -16.9% YTD
- Russell 2000: -18.6% YTD
- Nasdaq Composite: -24.0% YTD
Draghi on brink after coalition partners withdraw backing
Italian prime minister set to quit as League, Forza Italia and Five Star say they will boycott confidence vote
Italian prime minister Mario Draghi’s government was unravelling on Wednesday evening as members of his national unity coalition walked out of parliament ahead of a vote of confidence in his leadership.
Matteo Salvini’s rightwing League, Silvio Berlusconi’s Forza Italia and the populist Five Star Movement said they would boycott the vote, saying Draghi had failed to give the Italian public adequate answers to pressing questions.
Draghi is expected to submit his resignation again to President Sergio Mattarella, which could trigger early elections and exacerbate a political crisis. This followed a previous offer to resign last week, which was rejected.
The bitter collapse of the government followed a rancorous parliamentary debate on Wednesday, with Draghi accusing members of his coalition of seeking to subvert his policy agenda, even as they claimed to profess loyalty.
He had demanded the members of his coalition recommit themselves to his reforms but his gamble backfired as the three biggest parties balked.
“We were expecting answers from you for businesses and households, for students facing rising petrol prices, workers paying higher utility bills, and even taxi drivers — but nothing,” Stefano Candiani, a senator from the League, told parliament, announcing the party’s decision to boycott the vote of confidence.
Italy’s latest political crisis comes as the country faces mounting economic and inflationary pressures, stemming from Russia’s invasion of Ukraine.
The prospect of protracted uncertainty is likely to unsettle financial markets, the EU and the European Central Bank, which is set to begin a tightening cycle on Thursday that will raise Italy’s borrowing costs.
It also increases doubts over Italy’s ability to fulfil conditions laid down by the EU for receipt of its €200bn share of the bloc’s €750bn coronavirus recovery fund. Italy has so far received €46bn, with a further €21bn tranche due in the coming weeks.
Draghi’s exit would leave an unfinished agenda of important economic reforms — including overhauls of the tax, justice and procurement systems — intended to make Italy a more attractive place to do business, and improve long-term growth.
“Pivotal structural reforms, necessary for the EU recovery fund’s next instalment to arrive, have not been completed,” said Giuliano Noci, a business strategy professor at Milan Politecnico. “This could realistically derail the recovery plan.”
Noci said that Draghi was also playing a key role in the western alliance against the Russian invasion of Ukraine, and his departure would have geopolitical implications. “He has become a reference point for Europe in the Nato camp, and without him the situation will complicate further.”
A former ECB president, Draghi was tapped to form a new national unity government in February 2021 as Italy reeled from Covid-19 and suffered one of western Europe’s biggest pandemic-related economic contractions.
Draghi and his team revived the faltering Covid vaccination programme and oversaw last year’s economic rebound, with gross domestic product growing 6.6 per cent.
But the invasion of Ukraine put more pressure on the prime minister, given Italy’s historically warm ties to Russia. Draghi took a tough line against the invasion, vigorously condemning Moscow for undermining the international order.
But his stance, and his promise of military support for Ukraine, unsettled members of his coalition, particularly Five Star, which has been traditionally sympathetic towards Moscow.
Canal Plus in Advanced Talks to Acquire Orange’s Film, Television, Pay-TV Divisions
Canal Plus Group is in advanced discussions to acquire the film, television, and pay-TV divisions of Orange, the leading French telco group.
Canal Plus Group, whose parent company is Vivendi, already owns 33.3% of OCS, the pay-TV arm of Orange, and has been distributing the service on its platform as part of its cable bundle since 2011. Canal Plus and Orange could enter into exclusive negotiations as early as September and would then be subjected to anti-trust approval, according to a pair of senior industry sources. Closing that pact could take another year.
The deal currently being discussed would also include the acquisition of Orange Studio, the content division in charge of co-producing, selling abroad and distributing select films in France. Recent movies released locally by Orange Studio include Florian Zeller’s “The Father.” The banner also has French rights to Zeller’s follow up “The Son.”
OCS, meanwhile, has been investing big bucks in premium content to recruit subscribers since launching in 2008, notably with its multi-year deal with HBO, but the banner has struggled to become financially viable. OCS has been weakened by the successive launches of competitive offers from rival SVOD services in France. On top of that, OCS’s exclusive multi-year deal with HBO, which was its biggest asset to lure new subs, is coming to an end in early 2023. Although Warner Bros. Discovery is now looking to delay the roll out of its combined HBO-Discovery+ service in France beyond 2023, OCS isn’t in a position to renegotiate another type of exclusive deal.
Canal Plus Plus, however, would have enough leverage to strike an exclusive distribution deal with this new HBO-Discovery+ service to aggregate it as part of its cable bundle in a pact similar to the one it signed with Disney + in France, according to Francois Godard at Enders Analysis. Godard also predicts such deal would have strong chances of being approved by the anti-trust board.
In 2011, the anti-trust board blocked Canal Plus Group’s attempt to merge with OCS and launch a premium pay TV channel, but Godard says “the world has changed and Canal Plus is no longer dominating the French market.” “Watchdog authorities are aware that Canal Plus must consolidate to face off global streamers like Disney which are spend €30 billion in content this year,” Godard continued. “Canal Plus’s strategy today is to increase their scale, they’re on a world market and they need to ramp up their worth and subscriber base to finance bigger productions,” the analyst continued.
As a pay TV service, OCS has to invest in local and European films, like Canal Plus, and benefits from an exclusive window set at six months after their theatrical release — way before global streamers like Netflix and Amazon which have a 15-month window. OCS signed last February a three-year pact with film orgs to invest at least €60 million on French and European film in the three years. But it’s uncertain OCS would continue operating as it does today under these obligations if it became fully owned by Canal Plus Group. For French producers looking to finance their movies, that could mean one less source of pre-financing to tap into. “Canal Plus is known for digesting its rivals — it did it with TPS, a pay TV group which merged with Canal Plus in 2007 and was dead by 2012 — and OCS’s fate could be identical,” said a source close to Orange.
Earlier this year, Vivendi was in discussions with Lionsgate to take a stake in Starz, but its unclear where those talks stand at this point. “Canal Plus had two targets, Starz and OCS/Orange Studio, but (Vincent) Bolloré (Vivendi’s boss) is afraid of Hollywood, and OCS/Orange Studio represent an attractive asset for Canal Plus Group because they have a fairly large library of films,” said an industry source. In addition, Canal Plus already has a 33.3-percent stake in OCS and “isn’t willing to let another group step in and/or acquire the company,” said another source.
Vivendi is also on track to acquire a 57.35-percent stake in Lagardère, the French media, publishing and travel retail conglomerate. The French company is also a shareholder in Banijay, as well as FL Entertainment, the newly-listed banner comprising Banijay and the online gambling group Betclic.
Representatives of Canal Plus declined to comment on this report. Variety is awaiting a comment from Orange.
LVMH Highlights Recruitment Drive as Vacancies Reach Record Levels
The world's biggest luxury group is looking to fill 2,000 positions by the end of the year amid a shortage of skilled workers.
WE NEED YOU: LVMH Moët Hennessy Louis Vuitton is hiring.
While that may be a given for the world’s largest luxury group, vacancies are peaking amid a shortage of skilled workers, Chantal Gaemperle, executive vice president of human resources and synergies at LVMH, said at an event highlighting the company’s recruitment efforts during the last 12 months.
“We have to prepare for the future now, and it’s all the more crucial as it is difficult to find talent and we have very substantial needs,” she told employees gathered at LVMH headquarters on Avenue Montaigne in Paris for the screening of a short film based on the story of Lucie Faucher, an apprentice seamstress at Givenchy.
“We have a record number of vacancies this year. We have 2,000 left to fill by the end of the year and we need leather goods workers, jewelers, watchmakers and sales associates, as well as hotel and restaurant workers. And if we project ourselves a little further out to 2024, we’re talking about 30,000 positions to be filled to ensure continuity,” she added.
Underlining the importance of the issue, LVMH chairman and chief executive officer Bernard Arnault attended the screening of the documentary, titled “Métiers d’Excellence, le cercle vertueux,” or “Métiers d’Excellence, the Virtuous Circle.” The group, which owns brands including Louis Vuitton, Dior and Guerlain, plans to broadcast a trailer for the film on LinkedIn, Facebook and Twitter on Wednesday.
Alexandre Boquel, head of development for LVMH’s Métiers d’Excellence division, said the group has ramped up efforts to source new talents, including a recruitment tour in five French cities and school programs targeting 1,600 students under the age of 14. “It’s been a crazy year with a single obsession: transmitting know-how,” he said.
LVMH plans to ramp up the intake at its Institut des Métiers d’Excellence, which has trained some 1,400 people in France, Switzerland, Italy, Spain, Germany and Japan since it was founded in 2014. This fall, 450 apprentices will join the program, which is expanding for the first time to the U.S. with jeweler Tiffany & Co.
Boquel invited Faucher, who is combining her apprenticeship at Givenchy with vocational studies at the Institut Français de la Mode, on stage to detail her experience. The trainee seamstress revealed she applied for the position by sewing a jacket and embroidering her CV on the lining.
To underline the potential of a career in craftsmanship, Boquel highlighted the fact that Jacqueline Smeyers-Picot, the head of the flou division at Dior’s haute couture workshop, this year won the prestigious National Order of Merit for her services to the fashion industry.