Yellen’s Interest-Rate Comment Illustrates the Market’s Greatest Worry
The possibility of a bond-market tantrum or higher inflation has supplanted pandemic-related concerns
During earnings season in the middle of a pandemic, there would seem to be no shortage of things for investors to fret about. Could a new variant of the virus knock markets? Or negative guidance from a major American company reset earnings expectations?
Perhaps not. An offhand comment by Treasury Secretary Janet Yellen about interest rates on Tuesday revealed what is fueling market sentiment, to the exception of almost anything else.
Speaking at an event with the Atlantic, Ms. Yellen said, “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy.” She was referring in particular to the Biden administration’s planned long-term spending, some of it years down the line, when the economy will probably be much closer to full employment.
To be sure, the market was already down for the day when the Treasury Secretary’s comments hit the wires, but it’s telling that such an anodyne remark—by someone who knows very well the clear demarcation between Federal Reserve and Treasury policy—could deliver such a jolt. Ms. Yellen walked back her comments later, at The Wall Street Journal’s CEO Council Summit.
How the Fed reacts to the economic recovery and the administration’s bulging spending plans isn’t all that matters, but it sometimes seems like investors believe that it is. Chairman Jerome Powell has repeatedly stressed that the Fed intends to sit on its hands and allow inflation to stray marginally above 2% without acting to cool the economy.
Investors largely trust Mr. Powell, but they’re cautious too. The possibility of a bond-market tantrum or higher inflation has supplanted pandemic-related risks as investors’ greatest concern Bank of America’s monthly fund-market surveys for the past two months.
A hint of deviation from the Fed’s existing policy—apparently from any source, in any context—will continue to be seen as the greatest risk of an upset of already very highly valued equity markets.
Washington shies away from open declaration to defend Taiwan
White House official says shift to ‘strategic clarity’ would carry ‘downsides’ in face of China’s belligerence
The top White House Asia official has warned that any declaration that the US would defend Taiwan from a Chinese attack would carry “significant downsides”.
Washington has for decades maintained a policy of “strategic ambiguity” regarding Taiwan, designed to discourage Taipei from declaring independence and China from taking military action to seize the country. Beijing claims democratic Taiwan as part of its sovereign territory.
Some experts have called for a shift to “strategic clarity” to make clear to Beijing that the US would defend Taiwan. But Kurt Campbell, the White House Asia tsar, said such a shift entailed risk.
“There are some significant downsides to . . . strategic clarity,” he told the Financial Times Global Boardroom conference on Tuesday.
“The best way to maintain peace and stability is to send a really consolidated message that involves diplomacy, defence innovation and our own capabilities to the Chinese leadership, so they don’t contemplate some sort of ambitious, dangerous provocative set of steps in the future.”
China’s aggressive military activity and growing defence capabilities warrant a stronger message from Washington, some analysts have argued. But others have contended that the response could trigger an undesired outcome. China has warned the US about crossing a “red line” over Taiwan.
Avril Haines, director of national intelligence, recently said China would view a policy shift as “deeply” destabilising. “It would solidify Chinese perceptions that the US is bent on constraining China’s rise, including through military force, and would probably cause Beijing to aggressively undermine US interests worldwide,” she said.
But David Sacks, a fellow at the Council on Foreign Relations who supports a change, said there was “significant downside to strategic ambiguity”, which was created at a time when China did not have the military capability to assault Taiwan.
“US policy must recognise that deterrence is eroding and it must adapt to China’s growing capabilities,” he said. “China’s actions in Hong Kong show that western criticism and sanctions are not enough to shape its behaviour. Strategic clarity would convey to China the seriousness with which we take the question of Taiwan’s future.”
Concerns have mounted as China has flown more warplanes into Taiwan’s air defence identification zone over the past year, in what has become almost routine activity. Last month, the People’s Liberation Army sent a record 25 military aircraft into the south-western corner of Taiwan’s ADIZ.
Analysts said the flights were aimed at intimidating Taipei and exhausting its air force, which is forced to scramble jets in response.
In his final congressional appearance in March before retiring as head of US forces in the Indo-Pacific, Philip Davidson said he was worried that China could attack Taiwan within six years. He also said that while strategic ambiguity had helped preserve the status quo for decades, “these things should be reconsidered routinely”.
Days later, a senior US official told the FT that the administration thought China was flirting with the idea of taking military action.
Asked whether the world should be preparing for possible conflict over Taiwan, Campbell played down the risk, saying the Chinese military activity was an effort to “turn the screws” on Taiwan.
But Elizabeth Economy from the Hoover Institution think-tank, who spoke on the panel alongside Campbell, said she was increasingly concerned.
“One thing that you can learn about Xi Jinping from reading all of his speeches and tracking his actions is that there’s a pretty strong correlation between what he says and what he does,” Economy said.
“He’s talked about the need to reunify with Taiwan sooner rather than later. He hasn’t renounced the use of force . . . We need to take very seriously the threat that he may become overconfident, that his military may become overconfident.”
Ryan Hass, a China expert at the Brookings Institution think-tank, said Campbell’s statement was important because there were “few issues . . . upon which precision of language carries greater consequence than Taiwan”.
“Campbell’s reiteration of longstanding policy signals that steadiness and firmness will remain the order of the day for dealing with Taiwan issues,” Hass said. “His comments should limit future freelancing on Taiwan policy by US officials.”
A tale of two airline markets
Warren Buffett lost out by selling US carriers last year but Europe may be a different story
Warren Buffett doesn’t admit to many mistakes. Asked over the weekend about his decision to dump $4bn in US airline shares last May, the Berkshire Hathaway chief executive responded drily, “I do not consider it a great moment in Berkshire’s history.”
Shares in American, United and Southwest Airlines have all more than doubled in a year, and Delta’s stock price had as well until a recent tumble brought its gain below 100 per cent. Though most US carriers are still burning through cash, they are unabashedly enthusiastic about the future. “The worst is behind us,” Southwest chief executive Gary Kelly said at first-quarter earnings, and American’s chief Doug Parker predicted “the pace of recovery is accelerating”.
Across the Atlantic, Lufthansa CEO Carsten Spohr tried to sound similarly upbeat. “We do look to the future with quite some confidence and optimism,” he said. But he also had to reassure investors that “this unprecedented crisis forces us to overcome our known weaknesses, and it will make us stronger”.
Although they are linked by alliances, the big US and European airlines are facing radically different fates. The Covid-19 pandemic has exacerbated structural differences between the two markets, putting the American carriers in a much stronger position to adjust to a radically altered travel environment.
By 2019, North America was highly profitable. Most of the big carriers had used Chapter 11 bankruptcy to cut costs. Fifteen years of consolidation had left the top five carriers (including Air Canada) with 75 per cent of capacity, allowing them to boost prices.
In Europe, cut-price operator Ryanair had already muscled its way into the top five, a group which controls just 51 per cent of capacity, and other low-cost carriers were nipping at their heels. Lufthansa and IAG, parent of British Airways, are fighting back with their own low-price arms, but those are a work in progress. European flag carriers depend much more on long-haul and business passengers to turn a profit.
Enter the pandemic. Global passenger traffic dropped by two-thirds last year, as measured by revenue-passenger kilometres, which takes into account traveller numbers and the length of flights. Carriers tapped government aid programmes, sold planes and furloughed or let staff go to stay afloat.
Winter lockdowns dashed hopes for a quick recovery. Industry group Iata last month projected that global demand in 2021 would only rebound to 43 per cent of 2019 levels, and the industry as a whole would continue to lose money.
But drill down and a transatlantic split appears. US domestic demand is expected to hit 2019 levels for the second half, while internal European demand will languish below 50 per cent. And US airlines will narrow their collective 2021 loss to 2.7 per cent of revenue, while European airlines will post loss margins of 19 per cent.
Rapid vaccine rollout and pent up desire to see spread out families are prompting Americans to start booking domestic flights, as well as some nearby beach vacations. More than 1.6m people went through American airport screening on Sunday, the most since March 2020. No wonder the US last week saw the launch of its first freestanding new airline since 2007.
The situation is quite different in continental Europe, where vaccines have been slower to arrive and flights last week were down 64 per cent from 2019. Uncertainty around UK travel rules has forced Heathrow airport to plan for anywhere from 13m to 36m passengers this year, down from 81m in 2019. Low-cost carriers are better positioned to move routes around; easyJet is already promising free last-minute changes to help avoid quarantine.
“Historically we compared the US and Chinese domestic markets with short-haul travel within the single European sky. The pandemic has been a sobering reminder that the latter is at heart an international market and much more complex to restart,” says Geoffrey Weston of Bain & Co.
Business travel remains deeply depressed everywhere. Given the rise in video conferencing, some analysts forecast that demand will still be 10 per cent below 2019 levels in 2025. Lufthansa, which used to draw 45 per cent of revenue from corporate travellers, is scaling back high-end offerings and expanding premium economy to attract price-conscious small businesses and splurging leisure travellers.
Having missed the US rebound, Buffett says he “still wouldn’t want to buy the airline business international[ly]”. But the slowdown will not last for ever, even in Europe. Watch for the strongest carriers to expand organically. Why buy a failing competitor when landing slots, planes and crew are already going cheap?
Births in U.S. Drop to Levels Not Seen Since 1979
Millennials fuel continued downward trend in fertility rates
The number of babies born in America last year was the lowest in more than four decades, according to federal figures released Wednesday that show a continuing U.S. fertility slump.
U.S. women had about 3.61 million babies in 2020, down 4% from the prior year, provisional data from the Centers for Disease Control and Prevention’s National Center for Health Statistics shows. The total fertility rate—a snapshot of the average number of babies a woman would have over her lifetime—fell to 1.64. That was the lowest rate on record since the government began tracking it in the 1930s, and likely before that when families were larger, said report co-author Brady Hamilton. Total births were the lowest since 1979.
Because the Covid-19 pandemic emerged in March, the figures capture just a short period at year’s end when the unfolding health and economic crisis could be reflected in women’s decisions about getting pregnant. Women typically have fewer babies when the economy weakens. Fears of getting sick, making medical appointments and delivering a baby as a deadly virus spread also dissuaded some women from pregnancy.
“The fact that you had this coincide with the time the pandemic hit is certainly cause for suspicion,” said Dr. Hamilton, a federal statistician and demographer. He added that it was too soon to gauge the exact impact of the pandemic on fertility.
Demographers say the data suggests that more fundamental social and economic shifts are driving down fertility. Births peaked in 2007 before plunging during the recession that began that year. Although fertility usually rebounds alongside an improving economy, U.S. births fell in all but one year as the economy grew from 2009 until early 2020.
“It’s not just Covid. It’s the fact that the birthrates never recovered from the Great Recession,” said Kenneth Johnson, senior demographer at the University of New Hampshire. “I’ve been waiting for years to see a big jump in fertility to women in their 30s and it hasn’t happened.”
Prof. Johnson estimates that about 7.6 million fewer babies have been born as a result of lower fertility rates since 2007. He said separately released provisional monthly data from the CDC showed births declined about 7.7% in December. That shows a drop that was already under way before the pandemic and accelerated once the pandemic took hold.
Millennials, born between 1981 and 1996, now account for the majority of women having children. In seeking to explain their lower fertility rates, researchers have pointed to the fact that they are marrying later in life, getting higher levels of education and are less financially secure than previous generations when they were the same age.
Provisional birthrates fell for all women ages 15 to 44 last year. That included women ages 40 to 44, whose birthrates declined 2%. The rate for that age group had risen almost continuously from 1985 to 2019, by an average of 3% a year.
The sharpest fertility declines in 2020 were among women in their late teens and early 20s. Since peaking in 1991, the teenage birthrate has fallen 75%.
U.S. fertility rates still remain above those of many other developed countries that have long struggled with low birthrates, such as Japan, Italy and Germany. “We are moving down toward that but we haven’t quite reached the midrange of all the European countries,” Dr. Hamilton said.
Kayla Knott, 34 years old, and her husband, Harrison Knott, had planned to start trying for a third child in 2020. The Willow Spring, N.C., couple was already nervous that the 2020 elections could affect the cost of healthcare, she said. Then the pandemic hit and a third child seemed too risky. Ms. Knott quit her side job cleaning houses and focused on caring for her sons, ages 4 and 2.
“We didn’t want to bring another person into a super unsafe situation,” Ms. Knott said. Early on they ran out of disposable diapers for their youngest son and couldn’t find them in stores or online. A friend told her she had to choose between having her mother, who is a physician, or her husband with her while she delivered her baby in the early weeks of the pandemic.
“We were worried about income and just food scarcity and diaper scarcity,” Ms. Knott said. “When the diapers ran out and we were putting cloth diapers on our toddler, we were like, ‘This is a really good reason for not having a kid right now.’ ”
Ms. Knott said that with more normalcy returning to everyday life, the couple is reconsidering trying for a baby. Yet she remains hesitant because no Covid-19 vaccines have been approved for young children. “We’re vaccinated but our kids are still vulnerable,” she said.
Nestlé to take on Oatly with pea milk brand
World’s largest food company targets share of $17bn plant-based dairy market
Nestlé is taking on Oatly in Europe with the launch of pea milk brand Wunda, in a belated play by the world’s largest food company for a share of the growing $17bn plant-based dairy market.
The rare creation of a new brand by Nestlé comes as China Resources-backed oat milk maker Oatly pushes for a valuation of as much as $10bn in its forthcoming initial public offering on New York’s Nasdaq exchange.
While Nestlé has been expanding in meat substitutes, it is relatively late to a plant-based dairy market propelled by consumers’ appetite for environmentally friendly products and their perceived health benefits.
“Plant-based in food and drinks is really on the rise and I think it’s very structural. I’ve been in the business for many years and I’ve never seen a category growing so fast or so strong,” said Cédric Boehm, head of dairy for Europe, the Middle East and north Africa at Nestlé.
Wunda, developed by Nestlé researchers and made from yellow peas, will be launched in France, the Netherlands and Portugal first, mainly through retailers, with an eye to pushing into more European markets.
The product line is Nestlé’s first global plant-based dairy brand, though it offers plant milks under its Nesfit brand in Brazil and plant-based versions of drinks such as Milo and Nesquik.
As well as its original recipe, which includes sugar for flavour and sunflower oil to help the components mix, the Wunda range includes a “barista” version for coffee, plus unsweetened and chocolate versions, the group said.
Nestlé chose to use yellow peas rather than the more popular almonds, oats or soya, arguing the product offers a higher protein content and more versatility for use in drinks and cereals.
Existing pea milks, which include products made by California-based Ripple and UK-based Mighty Pea, have attracted mixed reviews including complaints of a legume taste.
Nestlé will have some catching up to do with other plant-based milk brands on the market.
French rival Danone, which owns the Alpro and Silk brands, sold €2.2bn of plant-based dairy alternatives in 2020, up from €1.9bn a year earlier, and this year acquired US-based Earth Island, maker of Follow Your Heart vegan mayonnaise and spreads.
Oatly, based in Malmo, Sweden, had global revenues of $421m last year, with Europe, the Middle East and Africa accounting for $302m.
Nestlé itself sold SFr100m ($109m) of plant-based dairy alternatives in 2020, along with SFr200m of meat substitutes under brands such as Garden Gourmet and Sweet Earth, it said. The company’s total sales were SFr84.3bn.
Boehm said Nestlé had considered acquiring plant-based dairy brands but “the prices are really high. There is a kind of craze around a lot of M&A.”
He said the Swiss group expected further growth in the plant-based dairy market. “We wouldn’t go [into this market] if we didn’t believe that we were in a position to win,” he said, adding that Wunda could expand beyond pea-based products.
In western Europe, North America and Australasia, soya milk consumption has stagnated but sales of other plant milks, including almond and oat, have shot up by double-digit figures in all but one of the past 10 years. In 2020, sales grew almost 20 per cent to $4.4bn, according to data from Euromonitor.
Nestlé has placed sustainability at the forefront of the Wunda brand, with its carbon footprint certified by advisory group the Carbon Trust.
Wunda Original produces 0.58kg of carbon dioxide equivalent per litre, compared with 0.44kg per litre of Oatly Barista and about 1.25kg per litre of UK-produced cow’s milk, according to the Agriculture and Horticulture Development Board.
Nestlé said Wunda would be carbon neutral. It will offset emissions that cannot be eliminated, with more than 2,500 tonnes of carbon dioxide equivalent in 2021 offset through a forest protection project in Cambodia.
Yellen says rates may have to rise to prevent ‘overheating’
Remarks by US Treasury secretary exacerbate sell-off in technology stocks
US Treasury secretary Janet Yellen warned on Tuesday that interest rates may need to rise over time to keep the US economy from overheating, exacerbating a sell-off in technology stocks before she clarified her remarks later in the day.
The former Federal Reserve chair made the comments in the context of the Biden administration’s plans for $4tn of infrastructure and welfare spending over the next decade, rather than the $1.9tn economic stimulus already enacted this year because of the pandemic.
“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said at an event hosted by The Atlantic magazine.
“So it could cause some very modest increases in interest rates to get that reallocation. But these are investments our economy needs to be competitive and to be productive.”
Yellen’s remarks captured the attention of investors and economists who have been hotly debating whether the trillions of dollars of federal spending planned by Biden, combined with the rapid vaccination rollout, will cause a jolt of inflation that may force the Fed to intervene by tightening monetary policy.
The comments seemed discordant with Yellen’s previous views, shared by other Biden administration officials and the Fed, that any inflationary pressures in the US would be transitory. She also appeared to wade into the arena of monetary policy, which Treasury secretaries typically leave to the Fed.
In a later appearance at The Wall Street Journal’s CEO Council on Tuesday afternoon, Yellen clarified her remarks, saying higher rates were “not something I’m predicting or recommending” and she did not think there was “going to be an inflationary problem”.
“If anybody appreciates the independence of the Fed. I think that person is me,” Yellen added.
Yellen’s initial comments added extra pressure to shares of high-growth companies, whose future earnings look relatively less valuable when rates are higher and which had already fallen sharply early in Tuesday’s trading session. The tech-heavy Nasdaq Composite ended the day down 1.9 per cent, while the benchmark S&P 500 was 0.7 per cent lower.
Market interest rates, however, were little changed, with the yield on the 10-year Treasury at 1.59 per cent.
The Fed is still far from raising interest rates, saying the US economy would have to reach full employment, with inflation hitting 2 per cent and be on track to exceed that level moderately for some time, before the first upward move.
Higher interest rates eventually would be a reflection of the Biden’s administration’s success in fuelling the US recovery. But the fear among some investors is that the Fed might be forced to act sooner and too aggressively if inflation spirals upwards uncontrollably, and inflation expectations become unmoored.
Yellen said she believed the Fed had the “tools” to control inflation effectively if needed and stressed that Biden’s investment plans, if enacted, would be spread over several years and would not add to US deficits in a negative way.
“Those investments will be phased in gradually over time. The proposals we have are for eight to 10 years, and involve more modest increases in spending, and tax increases to largely pay for them,” Yellen said at the WSJ event.
She added she “frankly disagrees” with Larry Summers, the former US Treasury secretary, who warned that the $1.9tn stimulus plan was excessive and too risky from an inflation perspective.
In both appearances, Yellen made the case that Biden’s spending plans would address structural deficiencies that have afflicted the US economy for a long time.
Biden’s $4tn plans would fund investment in infrastructure, child care, manufacturing subsidies and green energy to tackle a swath of issues ranging from climate change to income and racial disparities. Yellen said those investments had been “really short-changed or ignored” for too long.
When asked about her interactions with Jay Powell, the Fed chair, since becoming Treasury secretary, Yellen said they meet roughly on a “weekly basis” when they are both available.
“We have a wide range of issues we talk about, but it is entirely up to the Federal Reserve, how they manage monetary policy. It’s something I’m not going to give opinions about.”
Earlier in the day, Jen Psaki, the White House press secretary, said Biden “certainly agrees with his Treasury Secretary” and inflation concerns were closely watched at both the White House and the Treasury.
“We . . . take inflationary risk incredibly seriously, and our economic experts have conveyed that they think this would be temporary and that the benefits far outweigh the concern,” Psaki said. “I think [Yellen] was simply answering a question and conveying how we balance decision-making here.”
Closing Stock Market SummaryThe S&P 500 declined 0.7% on Tuesday, pressured by weakness in the mega-cap/growth/technology stocks, which disproportionately affected the Nasdaq Composite (-1.9%). The Russell 20000 declined 1.3%, while the Dow Jones Industrial closed higher by 0.1% amid a relatively upbeat finish.
From the get-go, the heavily-weighted stocks within the S&P 500 information technology (-1.9%), consumer discretionary (-1.2%), and communication services (-0.9%) sectors struggled, extending their underperformance from the prior day. Shares of Apple (AAPL 127.85, -4.69, -3.5%) fell 3.5%.
Money appeared to rotate into the large-cap cyclical stocks within the materials (+1.0%), financials (+0.7%), industrials (+0.4%), and energy (+0.02%) sectors. At one point, they were each trading in negative territory but seemed to draw support from an observation from Treasury Secretary Yellen.
Briefly, Ms. Yellen acknowledged in an interview with The Atlantic that interest rates may need to rise somewhat to prevent the economy from overheating, partially as a result from increased government spending. This view on the economy presumably supported the case to have exposure to cyclical stocks as reopening activity accelerates.
This view wasn't without its controversy, though, since some were confused if she meant market rates or the fed funds rate. If she meant the former, it wasn't particularly novel since many have been calling for long-term interest rates to rise with inflation expectations and economic growth. Higher rates help keep the economy in check through tighter financial conditions.
It would be remiss to not mention that growth stocks were underperforming well before the Treasury Secretary's comments on higher rates (viewed as a negative for their valuations), and that the Treasury market was behaving as a signpost for the peak growth narrative. There was no specific news that catalyzed the growth-stock selling.
The 10-yr yield, which is the benchmark for inflation/growth expectations, decreased two basis points to 1.59%. The 2-yr yield increased one basis point to 0.16%. The U.S. Dollar Index increased 0.4% to 91.27. WTI crude futures rose 1.9%, or $1.21, to $65.70/bbl.
In other developments, CVS Health (CVS 81.12, +3.43, +4.4%) reported better-than-expected earnings results and issued upside FY21 EPS guidance. President Biden said his new goal is to vaccinate 70% of U.S. adults with at least one shot by July 4. The FDA could soon approve Pfizer's (PFE 39.95, +0.12, +0.3%) COVID-19 vaccine for emergency use in children ages 12-15, according to The New York Times.
Reviewing Tuesday's economic data:
- The U.S. trade deficit widened to $74.4 billion in March (consensus -$74.7 billion) from an upwardly revised $70.5 billion (from -$71.1 billion) in February, with exports increasing by $12.4 billion to $200.0 billion and imports increasing by $16.4 billion to $274.5 billion.
- The key takeaway from the report is that both exports and imports increased sharply, which is a telltale sign of increased demand. Importantly, it was exports and imports of both industrial supplies and materials and consumer goods that paced the pickup in trade activity, speaking to the uptick in demand seen for businesses and consumers alike.
- Factory orders for manufactured goods increased 1.1% m/m in March (consensus 0.7%) after decreasing an upwardly revised 0.5% (from -0.7%) in February. Shipments of manufactured goods were up 2.1% after declining 1.9% in February.
- The key takeaway from the report is that it suggests the recovery blip in February was largely a function of extreme winter weather and some natural slowing after a long streak of gains in factory orders. The report also demonstrates that demand for manufactured goods was quick to rebound.
Looking ahead, investors will receive the ISM Non-Manufacturing Index for April, the ADP Employment Change report for April, the final IHS Markit Services PMI for April, and the weekly MBA Mortgage Applications Index on Wednesday.
- Russell 2000 +13.8% YTD
- Dow Jones Industrial Average +11.5% YTD
- S&P 500 +10.9% YTD
- Nasdaq Composite +5.8% YTD
After Hours Summary: AYX +9.2%, CZR +6.8%, MTCH +6.4%, LYFT +5.8%, ATVI +5.6%, AKAM +2.7% higher on earnings; ESPR -20.3%, MRCY -11.7%, MCFE -5.6%, SYX -5.1%, INSP -4.2% lower on earningsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: BGFV +24.2% (also increases dividend by 20%, declares $1/sh special dividend), AYX +9.2%, RCKY +8.2%, KAR +7% (also acquires Auction Frontier), CZR +6.8% (says weekends in Las Vegas are sold out for the foreseeable future), MTCH +6.4%, LYFT +5.8%, ATVI +5.6%, BXC +4.9%, SPT +4.7%, HLF +4.3% (also names new COO), INGN +4.3%, AMRC +4.2%, WK +4%, JAZZ +3.6%, HASI +3.6%, INFN +3.5%, LSCC +3.4%, LPSN +3.3%, ANET +3.2%, CYRX +3.2%, ACLS +2.9%, AKAM +2.7%, ZG +2.6%, TMUS +2.4%, WTI +2.4%, DVN +2.2%, PRU +2.2% (also increases buyback authorization), TSLX +1.9%, PEN +1.7%, DENN +1.5%, PAA +1.5%, DOOR +1%, SKLZ +1%, DCPH +0.7%, PAYC +0.7%, OUT +0.6%, ARWR +0.5%, BTG +0.5%, STAG +0.5%, PXD +0.4%, RRR +0.4%, XLNX +0.4%, ENLC +0.4%, AMCR +0.3%, KAI +0.2%, MED +0.2%, PRO +0.2%, WTS +0.2%, DK +0.1%, HMN +0.1%, PUMP +0.1%
Companies trading higher in after hours in reaction to news: ATNX +28.8% (acquires Kuur Therapeutics for $185 mln), IBIO +17.4% (concludes litigation with Faunhofer USA; enters into license agreement), NVVE +6% (announces vehicle-to-grid EV charging hubs and transportation as a service offering), DVN +2.2% (declares fixed-plus-variable dividend up 13%), MGI +1.3% (has satisfied financial obligations under DPA), WRAP +1% (announces one-yr extension of BolaWrap pilot program with LAPD), FDMT +0.5% (announces new collaboration with investigators at UCal Berkeley), HIMS +0.3% (to restate earnings due to SEC guidance on warrants), PRSP +0.1% (awarded position on $700 mln BPA with DHS)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: ESPR -20.3%, MRCY -11.7%, MCFE -5.6%, SYX -5.1%, INSP -4.2%, PEAK -3.3%, NVTA -2.6%, BNFT -2.4%, H -2.1%, UPWK -2% (also introduces work marketplace category; announces rebranding), WU -1.9%, DHT -1.8%, EPAY -1.8%, DLB -1.5% (also CFO to retire), EXAS -1.5%, EQC -1.3%, ICHR -1.3%, PVG -1.2%, RNG -1.2%, GSKY -0.5%, HST -0.4% (also acquires fee simple interest in Four Seasons at Disney World for ~$610 mln in cash), RVI -0.4%, CTVA -0.3%, NEX -0.3%, RDN -0.3%, DEI -0.2%, COUR -0.2%, BKH -0.1%, HI -0.1%, JBGS -0.1%, LSI -0.1%, SGMO -0.1%, RYAM -0.1%
Companies trading lower in after hours in reaction to news: HFC -2.8% (to acquire Puget Sound Refinery for $350 mln, also suspends dividend for 1 year), NDAQ -0.5% (reports April metrics), PEP -0.3% (increases dividend), RDN -0.3% (increases dividend)
German police arrest far-right extremist
Man suspected of sending death threats to politicians as concerns about neo-Nazi activity grow
German police have arrested a suspected far-right extremist who they say sent dozens of death threats to German politicians signed with the name “NSU 2.0” — a reference to a notorious neo-Nazi group from the 1990s.
The case has made huge waves in Germany and rung alarm bells about the growing strength of the far right. It comes at a time when Germany is seeing a surge in extremist attacks on elected politicians and public servants.
According to official statistics released on Tuesday, Germany saw 23,604 politically-motivated offences with a rightwing background last year, the highest number since records began in 2001.
For nearly three years, police have been trying to identify the author of a series of threatening letters targeting MPs, media figures and lawyers — many of them women with an immigrant background.
They were sent under the pseudonym “NSU 2.0” — a reference to the National Socialist Underground, a neo-Nazi cell whose bloody campaign of killings, bombings and arson attacks claimed the lives of 10 people between 2000 and 2007.
The first known NSU 2.0-related threats were received in August 2018 by Seda Baysal-Yildiz, a German lawyer of Turkish descent who represented one of the victims of the original NSU group. The author threatened to kill her and her then two-year-old daughter.
Investigators later discovered her name had been searched for in a police database in the western state of Hesse, suggesting collusion with law enforcement agencies. Janine Wissler, leader of Die Linke, a leftwing party, and the comedienne Idil Baydar were also targeted.
A statement from prosecutors in Frankfurt and the police authority in the western state of Hesse on Monday said investigators had searched a flat in Berlin and taken a 53-year-old unemployed man into custody.
It said the man was suspected of having sent a series of letters with content of a “threatening, insulting nature, [designed to] incite racial hatred”. He had previously been convicted of other offences of an extremist nature.
Police and prosecutors are examining the man’s computers and continuing to investigate him for suspected incitement of racial hatred, using the symbols of a banned organisation, threats and verbal abuse.
Authorities in Hesse said in March that a total of 133 threatening letters had been sent, 115 of which could be attributed to the NSU 2.0 case and 18 to copycats. The 115 messages were sent to 32 people and 60 institutions in nine of Germany’s 16 states, as well as Austria. Most of them were emails, but some were sent by fax, SMS or via internet contact forms.
It remains unclear how the suspect acquired the personal data, including home addresses, of the people he targeted. A person close to the investigation said it was assumed he posed as a policeman in order to procure the information from local registry offices.
The statement stressed that the arrestee had never been employed by a police authority, either in Hesse or elsewhere in Germany.
Peter Beuth, Hesse’s interior minister, said Monday’s arrest exonerated the Hesse police. “Judging by everything we know today, no Hesse policeman was ever responsible for the NSU 2.0 threatening letters,” he said.
The investigation was complicated by the many copycats who employed the NSU 2.0 username to exploit the huge public interest aroused by the case. In the summer of 2020, a former policeman from the southern state of Bavaria was arrested on suspicion of sending threatening letters, some of which were directed at Bundestag MPs.