Closing Stock Market SummaryThe S&P 500 decreased 0.2% on Wednesday and was unsuccessful yet again at setting new all-time highs. The Nasdaq Composite (-0.1%) and Dow Jones Industrial Average (-0.4%) also closed slightly lower while the Russell 2000 (-0.7%) underperformed with a 0.7% decline.
Overall price action was tight ranged for most of the session, fueling suspicions that the market was either teasing investors with record highs or market participants tacitly agreed to wait and see for tomorrow's CPI report for May.
The S&P 500 came within one point of its all-time intraday high (4238.04) in the opening minutes of action and slipped into the close after another rejection at its all-time closing high (4232.60).
Losses were concentrated in the cyclical financials (-1.1%), industrials (-1.0%), materials (-0.8%), and energy (-0.6%) sectors on no specific macro drivers, outweighing the gains in the health care (+1.0%), utilities (+0.9%), real estate (+0.2%), and information technology (+0.1%) sectors.
Notably, the 10-yr yield declined four basis points to 1.49%, settling near the bottom of its three-month consolidation range and signaling peak inflation expectations. The 2-yr yield remained unchanged at 0.14%. This curve-flattening activity acted as a headwind for the financials sector.
UPS (UPS 201.06, -8.70, -4.2%) struggled with a 4% decline, weighing on the industrials sector, after underwhelming shareholders with financial targets for 2023.
In the health care space, Merck (MRK 74.01, +1.64, +2.3%) signed a supply agreement with the U.S. government for a COVID-19 experimental pill. In addition, reports indicated that the government plans to purchase vaccine doses from Pfizer (PFE 39.81, +0.96, +2.5%) and Moderna (MRNA 217.44, +4.44, +2.1%) to donate to the world.
The U.S. Dollar Index increased 0.1% to 90.16. WTI crude futures settled lower by 0.3% (-$0.18) to $69.90/bbl.
Reviewing Wednesday's economic data:
- Wholesale inventories increased 0.8% m/m in April (consensus 0.8%) following a downwardly revised 1.2% increase (from +1.3%) in March.
- The weekly MBA Mortgage Applications Index decreased 3.1% following a 4.0% decline in the prior week.
Looking ahead, investors will receive the Consumer Price Index for May, the weekly Initial and Continuing Claims report, and the Treasury Budget for May on Thursday.
- Russell 2000 +17.8% YTD
- Dow Jones Industrial Average +12.6% YTD
- S&P 500 +12.3% YTD
- Nasdaq Composite +7.9% YTD
World’s most valuable stamp sold for $8.3m to London-based Stanley Gibbons
Price tag for the 1856 One-Cent Magenta is more than a third of the Aim-listed group’s market capitalisation
The world’s most valuable stamp has been bought for $8.3m by Stanley Gibbons, which plans to offer investors a chance to buy fractional ownership of the unique asset as part of a push by the 165-year-old company into digital collecting.
The 1856 One-Cent Magenta from British Guiana — known as the Mona Lisa of the stamp collecting world as the only one in existence as well as for its value — was bought at auction at Sotheby’s in New York from the collection of luxury shoe designer Stuart Weitzman.
At the same auction, David Rubenstein, co-founder of private equity firm Carlyle Group, bought a block of “inverted Jenny” stamps — famous for an upside-down aeroplane misprint — for $4.9m, setting a record for a US stamp sale. The money will go to charitable ventures.
The One-Cent Magenta has attracted record prices through its history. In 1856, British Guiana issued a small number of the temporary stamps while its postmaster waited for a shipment from England that had been delayed by a storm.
It last sold for $9.5m in 2014, which was a record at the time. According to the Smithsonian, which has exhibited the stamp, it has only appeared on rare occasions in public. Previous owners include John du Pont, heir to the DuPont chemical fortune.
The purchase by Stanley Gibbons amounts to more than a third of the market capitalisation of the Aim-listed company.
Shares in the group rose almost 10 per cent on Wednesday to above 3p, although they have largely not moved since the 2018 bailout of the company by fund manager Phoenix. The group took a controlling 58 per cent stake in the stamp merchant, and reduced the listed company’s debts, as part of a £20m deal.
Since then, a new management has restructured the company to cut costs and focus on profitable markets, although the turnround strategy has since been hit by falling sales in the pandemic.
Phoenix has provided a five-year interest-free loan to acquire the stamp, which will be displayed at the Stanley Gibbons flagship store on the Strand in London. The 165-year-old stamp is the same age as the company, which is the world’s oldest rare stamp dealer.
Graham Shircore, chief executive of Stanley Gibbons, said the company wanted to make it available for everybody to own through fractional ownership and the creation of digital collections.
Stanley Gibbons is also in talks to partner Castelnau Group, another company controlled by Phoenix, which is developing a digital platform to buy, sell and collect assets.
Shircore said the deal brought together “the world’s largest stamp dealer and the world’s most valuable stamp”.
He added that the company was a dealer, rather than collector in its own right, although would hope that the stamp would appreciate in value under its ownership. Plans were already under way to sell “shares” in the stamp to philatelists, he said, describing it as a “huge transaction” for a relatively “small business”.
Harry Wilson, chair of Stanley Gibbons, said the purchase was “a highly significant next step in the rebuilding of the world’s oldest stamp dealer”.
Drug traffickers change tactics to avoid Covid-19 travel curbs
Shipping containers rather than human couriers used to smuggle narcotics into Europe
Drug traffickers are adapting to Covid-19 travel restrictions and border closures by switching from using human couriers to shipping containers and commercial supply chains, European officials have warned.
Law enforcement experts say the illicit drug market has proved “remarkably resilient” to the disruption caused by the pandemic as traffickers alter the routes and methods used in wholesale smuggling and increase the production of illegal drugs in Europe.
Cannabis resin produced in Morocco and typically brought into Spain to be trafficked over land into the rest of the EU had increasingly shifted to maritime routes using shipping containers, the European Monitoring Centre for Drugs and Drug Addiction said in its 2021 report on Wednesday.
An increase in maritime seizures of heroin, usually smuggled over land from the Middle East to Europe, has also been reported. Large seizures of both cannabis and heroin were reported in a number of European seaports in the second half of 2020, the agency said.
Highlighting the use of business supply chains, the report said new forms of tranquillisers appear to have been shipped from companies in China as bulk powders to Europe, where they are processed into finished products including tablets, capsules and e-liquids for vaping.
Organised crime groups were also intensifying illegal drug production in Europe, the report said. Despite disruptions caused by Covid-19, cannabis cultivation and synthetic drug production within the EU appeared stable at pre-pandemic levels. Signs of a possible increase in crack cocaine availability and use linked to the pandemic were also a concern.
“We are witnessing a dynamic and adaptive drug market that is resilient to Covid-19 restrictions,” said Alexis Goosdeel, director of the Lisbon-based agency. “We are also seeing patterns of drug use that are increasingly complex, as consumers are exposed to a wider range of highly potent natural and synthetic substances.”
Officials are concerned that an increase in insomnia and anxiety during the Covid-19 pandemic could lead more people to self-medicate with new forms of tranquillisers sold by criminal gangs and often marketed as “designer benzodiazepines”.
These drugs are not controlled by international drug laws and are frequently sold as “legal” replacements for prescription drugs such as Valium and Xanax, the report said.
Users may be unaware of the substances or doses they are taking, increasing the risk of severe poisoning, particularly if consumed with alcohol or other sedatives, according to the EMCDDA.
“New benzodiazepines have firmly established themselves on the new drugs market in Europe,” said Goosdeel. “It is likely that more substances from this group will continue to appear as users seek new drug experiences or alternatives to unavailable prescription medicines.”
While street-based retail drug markets were disrupted during early lockdowns in 2020, drug sellers and buyers also adapted by increasing their use of encrypted messaging services, social media apps, online sources and mail and home delivery services, the report said.
This raised the question of “whether a long-term impact of the pandemic could be the further digitalisation of drug markets”.
Gapping down
In reaction to earnings/guidance:
- PATH -13.4%, UNFI -8.9%, CMTL -6.6%, CPB -6.6%, BEST -3.1%, BF.B -2.4%, CASY -0.8%
Other news:
- ONDS -14.7% (prices offering of 6.4 mln shares of common stock at $7.00 per share)
- CVM -12.1% (prices offering of 1.4 mln shares of common stock at $22.62 per share)
- EYES -5.8% (files for $250 mln mixed securities shelf offering)
- LFMD -4.1% (files for $150 mln mixed securities shelf offering)
- OPCH -3.9% (prices secondary offering of 15 mln shares of common stock at $20.00 per share)
- MNMD -3.8% (co-founder/CEO J.R. Rahn is stepping down as CEO and a director)
- RIDE -3.7% (after disclosing its 10-Q was prepared assuming the Company will continue as a going concern)
- ACRS -3.5% (stock offering)
- CLVT -3.4% (commences offerings of ordinary shares and convertible preferred shares)
- ITI -2.2% (files for $100 mln mixed securities shelf offering)
- SPNE -1.7% (announces limited commercial launch of 3D-printed WaveForm L)
- THCB -1.6% (Microvast announces partnership with Gaussin)
- RACE -1.3% (appoints Benedetto Vigna as CEO)
- OUST -1.2% (to be the exclusive lidar supplier for PARIFEX's ETU Project)
Analyst comments:
- NEXA -2.8% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
- DISH -2.4% (downgraded to Underweight from Neutral at JP Morgan)
- BAP -1% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
Gapping up
In reaction to earnings/guidance:
- AGX +2.2%
Other news:
- CLNE +32.5% (meme stock volatility; also updates ATM programs)
- NEPT +16.5% (announces exclusive licensing agreement between Sprout Foods and CoComelon)
- ADMP +15.8% (FDA has accepted for review the Company's resubmitted New Drug Application for ZIMHI)
- CAAS +14% (Special Committee approved sale and purchase agreement)
- LYRA +12.8% (announces positive outcome of End-of-Phase 2 Meeting with FDA for LYR-210)
- GSL +8.7% (purchases 12 containerships for $233.9 mln)
- DCRC +7.5% (Solid Power rumored to be going public via SPAC deal with DCRC, according to Bloomberg)
- DPW +3.9% (Ault Global Holdings subsidiary, Coolisys Technologies Corp., and ChargeLab enter a partnership to support the launch of scalable electric vehicle smart charging solutions)
- VAL +3.7% (awarded 3-yr floater contract)
- KNSA +3.4% (announces patent for treatment of recurrent pericarditis)
- KCAC +2.7% (Wallbox to list on NYSE through merger with Kensington Capital Acquisition Corp. II)
- WOR +2.6% (acquires certain assets of Shiloh's US BlankLight business)
- SPXC +2.6% (sells its Sell SPX Transformer Solutions unit to GE-Prolec Transformers)
- TMDX +2.5% (announces presentation of OCS Liver PROTECT trial results)
- SQZ +2.5% (to present preclinical results from Tolerizing Antigen Carrier program demonstrating that TACs can drive antigen-specific immune tolerance through key mechanisms relevant to many complex autoimmune diseases)
- KPTI +2.3% (announces Xpovio data to be presented at the European Hematology Association 2021 Virtual Congress)
- BLDP +2.2% (agreement to empower advancements in fuel cell technologies)
- CSTL +1.6% (received approval from the New York State Department of Health for its DecisionDx-SCC test)
- TIGR +1.4% (prices offering of 6.5 mln ADSs at $24.50 per ADS)
- FIII +1.3% (Forum Merger III Corporation and Electric Last Mile file definitive proxy statement and Special Meeting of Stockholders to be held June 24, 2021 to approve business combination)
- WFG +1.2% (increases dividend and share buyback)
- XPO +1.1% (files for planned spin-off of GXO Logistics; raises outlook; provides guidance update for GXO)
Analyst comments:
- CC +3.2% (upgraded to Buy from Neutral at Goldman)
- ANF +3.1% (upgraded to Buy from Hold at Jefferies)
- FOXA +3% (upgraded to Overweight from Equal Weight at Wells Fargo)
- KLAC +1.8% (upgraded to Buy from Hold at Deutsche Bank)
- CL +1.4% (upgraded to Outperform from Neutral at Credit Suisse)
Early premarket gappers
- Gapping up:
- CLNE +33.7%, LYRA +21.7%, TMDX +9.3%, GSL +7.8%, DCRC +5.6%, SPXC +5%, VAL +3.7%, KNSA +3.4%, TIGR +3.2%, WOR +2.6%, CAAS +2.3%, SHW +2.1%, AGX +1.9%, HEAR +0.9%, ABM +0.9%
- Gapping down:
- ONDS -15.6%, CVM -9.7%, CLVT -7.1%, CMTL -6.6%, PATH -6.6%, LFMD -5%, OPCH -4.4%, THCB -3.6%, EYES -2.2%, ITI -2.2%, SPNE -1.7%, OUST -1.6%, ACRS -1.5%, RACE -0.9%
Ferrari picks electronics pioneer with no luxury experience as chief executive
Benedetto Vigna to join supercar maker in September from tech group STMicroelectronics
Ferrari has named an electric components specialist as its chief executive, a surprise appointment that ends a search that began late last year when its former boss Louis Camilleri stepped down with Covid-19.
The new boss Benedetto Vigna, an Italian, is the head of the sensors unit at STMicroelectronics, the technology group’s largest and most profitable division. He will join the supercar maker in September.
Vigna has been at STMicroelectronics since 1995, founding the division he leads, which is now the same size in revenues and employees as Ferrari.
He specialises in motion sensors and was part of the team that invented three-axis gyroscopes that change the screen ratio on a phone when it is turned.
The same technology that debuted in the iPhone 4 is now common in navigation systems in most modern cars, while Vigna led ST’s push to supply the auto industry with a range of technology.
However his appointment is a major surprise, having no direct automotive or luxury experience. Reported candidates for the post included a number of established luxury executives.
“The appointment is highly unexpected and, in our view, reflects the need to ‘reinvent’ Ferrari and the difficulty of securing candidates willing to take on the task,” said Philippe Houchois, an auto analyst at Jefferies.
“Having said that, one should not underestimate the strategic thinking of Ferrari and Exor chair John Elkann,” he said.
Exor, which Elkann heads, owns 36 per cent of Ferrari’s voting rights, as well as 14 per cent of Stellantis, the carmaker formed by the merger of Fiat Chrysler and France’s PSA this year.
Elkann is famed for his talent spotting after picking the then unknown Sergio Marchionne to run the nearly bankrupt Fiat in 2004.
In the following 14 years Marchionne transformed the business into a €200bn empire, including acquiring Chrysler and spinning out Ferrari and CNH Industrials as separate businesses.
Speaking on Wednesday at the announcement, Elkann said Vigna’s “deep understanding of the technologies driving much of the change in our industry, and his proven innovation, business-building and leadership skills, will further strengthen Ferrari and its unique story of passion and performance, in the exciting era ahead”.
Vigna called his appointment a “special honour” and said he joins “with a profound sense of responsibility towards the extraordinary achievements and capabilities of the men and women of Ferrari, to all the company’s stakeholders and to everyone around the world for whom Ferrari is such a unique passion”.
>>> Up
* eQ Raised to Accumulate at Inderes; PT 22 euros (+)
* Kloeckner PT Raised to 15.50 euros from 14 euros at M.M. Warburg (+)
* LVMH PT Raised to 750 euros from 660 euros at Jefferies
* Marks & Spencer Raised to Reduce at AlphaValue
* Smith & Nephew Raised to Outperform at Credit Suisse (+)
* UniCredit Raised to Buy at Citi
>>> Down
* Danone Cut to Underperform at RBC; PT 52 euros
* Medacta Cut to Neutral at Credit Suisse; PT 121 Swiss francs (+)
* Phoenix Group Cut to Add at Investec; PT 760 pence (+)
>>> Initiation
* GenSight Biologics Rated New Buy at Kempen & Co; PT 16 euros
* PolyPeptide Group Rated New Buy at Berenberg; PT 88 Swiss francs
* PolyPeptide Group Rated New Overweight at Morgan Stanley
* TotalEnergies SE ADRs Rated New Buy at MKM; PT $70
>>> Call
* Danone Cut at RBC, Things Set to Get Worse Before Improving
* Ferrari’s CEO Appointment ‘Highly Unexpected,’ Jefferies Says (+)
* Grenke Gets Another Buy as Berenberg Cites Fundamental Upside (+)
* LVMH, Kering PTs Raised on Luxury Sector Momentum: Jefferies
* PolyPeptide Analysts Start With Positive Ratings on Positioning