Closing Stock Market SummaryThe S&P 500 advanced 1.1% on Friday, recouping all of yesterday's tax-related decline, as investors bought the dip in most sectors of the market. The Nasdaq Composite (+1.4%) and Russell 2000 (+1.8%) outpaced the benchmark index while the Dow Jones Industrial Average trailed with a 0.7% gain.
The session started on a cautious note, as investors continued to contemplate reports that President Biden will propose increasing the capital gains tax rate for the wealthy. Talking points were more optimistic today, comprising of speculation that negotiations could reduce the rate, strategies to work around the taxes, and observations about the market's historical ability to weather tax increases.
The calmer demeanor lent itself to a familiar buy-the-dip mindset, further supported by data showing new home sales surge 20.7% month-over-month in March to a seasonally adjusted annual rate of 1.021 million (Briefing.com consensus 912,000). This was the highest annual rate of sales since August 2006.
Gains were spread across nine of the 11 S&P 500 sectors in a steady advance led by the financials (+1.9%), materials (+1.7%), and information technology (+1.4%) sectors. The resilient nature of the market presumably rekindled a fear of missing out on further gains and possibly short-covering activity.
There was a slight hiccup in the last 25 minutes of action, though, that pushed the consumer staples (-0.2%) and utilities (-0.2%) in the red on a closing basis.
Shares of Intel (INTC 59.24, -3.33, -5.3%), Honeywell (HON 224.51, -4.75, -2.1%), and American Express (AXP 144.30, -2.86, -1.9%) struggled in negative territory following their earnings reports, contributing to the relative underperformance of the Dow. Each of these companies topped EPS estimates, but INTC issued downside Q2 guidance and AXP missed revenue estimates.
U.S. Treasuries traded little changed for the third straight day despite the strong new home sales report. The 2-yr yield increased one basis point to 0.15%, and the 10-yr yield increased one basis point to 1.57%. The U.S. Dollar Index declined 0.6% to 90.82.
WTI crude futures settled higher by 1.1%, or $0.70, to $62.15/bbl. On a related note, California Governor Newsome announced that the state will stop issuing new fracking permits by 2024.
Reviewing Friday's economic data:
- New home sales surged 20.7% month-over-month in March to a seasonally adjusted annual rate of 1.021 million ( consensus 912,000) from an upwardly revised 846,000 (from 775,000) in February. March marked the highest annual rate for new home sales since August 2006. On a yr/yr basis, new home sales were up a whopping 66.8%, having lapped a very depressed comparison period due to the pandemic.
- The key takeaway from the report is that new home sales, which are counted when contracts are signed, rebounded sharply from the deep freeze experienced in the Midwest and South during February; however, the sizable drop in new home sales month-over-month in the West (-30.0%), and the higher proportion of new homes sold for $399,999 or less, also speaks to the increased affordability pressures being applied by high prices and rising mortgage rates.
- The preliminary IHS Markit Manufacturing PMI for April increased to 60.6 from 59.1 in March. The preliminary IHS Markit Services PMI for April increased to 63.1 from 60.4 in March.
Looking ahead, investors will receive Durable Goods Orders for March on Monday.
- Russell 2000 +15.0% YTD
- Dow Jones Industrial Average +11.2% YTD
- S&P 500 +11.3% YTD
- Nasdaq Composite +8.8% YTD
Nestlé Looks to Buy Maker of Nature’s Bounty Vitamins
Price being discussed is in the mid-single-digit billions
Nestlé SA is in talks to buy the maker of Nature’s Bounty vitamins for a price in the mid-single-digit billions, according to people familiar with the matter, as the Swiss food giant pushes further into nutritional offerings.
Nestlé could finalize a deal to buy the Bountiful Co. as soon as next week, some of the people said, though it isn’t guaranteed they will reach an agreement. Bountiful has been planning an initial public offering and could still opt for that path after all, or a different deal.
In addition to Nature’s Bounty vitamins, Bountiful’s brands include Pure Protein, which makes protein bars, Osteo Bi-Flex joint-care supplements and Puritan’s Pride vitamins and supplements.
Bountiful is majority-owned by private-equity firm KKR KKR +2.52% & Co. In a filing for the IPO earlier this month, Bountiful called itself the largest pure-play nutrition company in North America and one of three largest in the world.
The Nanterre commercial court puts Suez under pressure
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EXCLUSIVE- The commercial court has appointed Marc Sénéchal as ad hoc agent in charge of executing the Veolia-Suez merger. The latter's unions have seized the National Financial Prosecutor's Office and oppose the agreement reached on April 12.
While the buyout agreement announced between Suez and Veolia was considered on April 20 as "not acceptable" by the Ardian and GIP funds, announced among the buyers of the new Suez, the latter is under close supervision. It is a priori a third fund, Meridiam, which should become the future reference shareholder of the "new Suez", as envisioned by Veolia. In the meantime, Marc Sénéchal, ad hoc representative of Suez appointed by the commercial court of Nanterre and craftsman, with Gérard Mestrallet (ex-Suez), of the April 12 agreement, was entrusted with the "execution" of this deal. The two parties have less than a month to officially ratify their "final rapprochement", knowing that according to the joint press release between the two groups published on April 12, it is for the moment only an "agreement in principle" leaving a few questions open. Knowing that it is he, according to his entourage, "who facilitated the negotiations and made it possible to find this agreement", Marc Sénéchal has no intention of seeing this masterpiece of business diplomacy put back into operation.
Sénéchal also took care of Vallourec
A rather discreet character, but nonetheless very influential, Sénéchal has already been mobilized as an ad hoc representative on sensitive issues in Paris, such as that of Vallourec, on which he worked with judicial administrator Hélène Bourbouloux. He also intervened in the Mediapro affair which shook professional football. Judicial agent since 2005, he is a founding partner of BTSG, the leading French legal mandate structure which has four partners and 120 employees. He intervenes in both amicable and confidential proceedings - which is the case in Veolia-Suez - as well as in legal and collective proceedings. Associate professor at Paris I-Panthéon University, he is also honorary president of the National Council of Judicial Administrators and Judicial Representatives to the head of which he was elected at the age of 36.
Must-see Mestrallet
Gérard Mestrallet is much better known. And his presence in the case has been widely publicized. Honorary chairman of Engie and Suez, he opposed the takeover offer of Veolia in September 2020, saying in a column published by Le Figaro that Suez should remain independent. By the end of January, when Ardian and GIP had expressed their interest, he championed a "negotiated and amicable third way" foreshadowing his role as mediator, which will lead to the April 12 agreement.
Unions still going up
This agreement, said "du Bristol", the Suez unions have not digested and it has been months that they mobilized employees against the offer of Veolia. And for them, the struggle continues. Several organizations - claiming the majority of the intersyndicale - even filed a complaint on April 22 with the national financial prosecutor's office which targets the secretary general of the Elysee Palace Alexis Kohler, the CEO of Veolia Antoine Frérot, the chairman of the board of Engie Jean -Pierre Clamadieu and the CEO of the Meridiam Thierry Déau fund. They denounce both "the intervention of the Elysee Palace well in advance of the public announcement of the" merger project and "regular and repeated pressure to bring about" the merger. They also recall the public declaration in September by Prime Minister Jean Castex in favor of a rapprochement which "makes sense", a position "well beyond the neutrality that the law normally imposes on political power". It should be noted that Bruno Le Maire - who was initially very hostile to Veolia's offer - is not in the sights of the Suez unions. Yet it is the Minister of the Economy, Finance and Recovery who, according to L'Obs, organized on April 8 in Bercy with the Director of the Treasury, Emmanuel Moulin and that of the Caisse des Dépôts, Eric Lombard. , a meeting aimed at bringing the parties closer together. He then celebrated the April 12 agreement which he said "preserves jobs".
The AMF taken to task
The Bercy meeting to whistle the end of the game was held a few days after the publication, on April 2, of a press release from the Financial Markets Authority (AMF) calling for the search for a "negotiated solution "but reframing certain procedures used by Suez as part of its defense. A position taken, which tipped the soap opera towards a happy end for Veolia, at the same time provoking a lot of resentment on the side of Suez. The management of the group then spoke of a position "incomprehensible and once again favoring Veolia adopted via an unacceptable decision-making process because it does not respect p
Le tribunal de commerce de Nanterre met Suez sous pression
ABONNÉS
EXCLUSIF- Le tribunal de commerce a désigné Marc Sénéchal comme mandataire ad hoc en charge de l'exécution du rapprochement Veolia-Suez. Les syndicats de ce dernier ont saisi le Parquet national financier et s'opposent à l'accord conclu le 12 avril.
Alors que l’accord de rachat annoncé entre Suez et Veolia a été considéré le 20 avril comme "pas acceptable" par les fonds Ardian et GIP, annoncés parmi les repreneurs du nouveau Suez, ce dernier est sous tutelle étroite. C'est a priori un troisième fonds, Meridiam, qui devrait devenir le futur actionnaire de référence du "nouveau Suez", comme l'envisageait Veolia. En attendant, Marc Sénéchal, mandataire ad hoc de Suez désigné par le tribunal de commerce de Nanterre et artisan, avec Gérard Mestrallet (ex-Suez), de l’accord du 12 avril, s’est vu confier l' "exécution" de ce deal. Les deux parties ont moins d’un mois pour entériner officiellement leur "rapprochement définitif", sachant que selon le communiqué commun aux deux groupes publié le 12 avril, il ne s'agit pour l'instant que d'un "accord de principe" laissant quelques questions ouvertes. Sachant que c'est lui, selon son entourage, "qui a facilité les négociations et a permis de trouver cet accord", Marc Sénéchal n'a aucune intention de voir ce chef-d'oeuvre de diplomatie des affaires remis en chantier.
Sénéchal s'est aussi occupé de Vallourec
Personnage plutôt discret, mais néanmoins fort influent, Sénéchal a déjà été mobilisé comme mandataire ad hoc sur les dossiers délicats de la place de Paris, comme celui de Vallourec, sur lequel il a travaillé avec l’administratrice judiciaire Hélène Bourbouloux. Il est aussi intervenu dans l'affaire Mediapro qui a ébranlé le football professionnel. Mandataire judiciaire depuis 2005, il est associé fondateur de BTSG, première structure française du mandat de justice qui compte quatre associés et 120 salariés. Il intervient dans les procédures tant amiables et confidentielles – ce qui est le cas dans Veolia-Suez - que judiciaires et collectives. Professeur associé à l’Université Paris I-Panthéon, il est enfin président d’honneur du Conseil national des administrateurs judiciaires et des mandataires judiciaires à la tête duquel il a été élu à l’âge de 36 ans.
Incontournable Mestrallet
Gérard Mestrallet, lui, est bien plus connu. Et sa présence dans le dossier à été largement médiatisée. Président d'honneur d'Engie et de Suez, il s’était opposé en septembre 2020 à l'offre de rachat de Veolia, estimant dans une tribune publiée par Le Figaro, que Suez devait rester indépendant. Dès fin janvier dernier, alors qu’Ardian et GIP avaient manifesté leur intérêt, il s’était fait le chantre d’une "troisième voie négociée et amiable" préfigurant son rôle de médiateur, qui débouchera sur l'accord du 12 avril.
Syndicats toujours remontés
Cet accord, dit "du Bristol", les syndicats de Suez ne l’ont pas digéré et cela fait des mois qu'ils ont mobilisé les salariés contre l'offre de Veolia. Et pour eux, la lutte continue. Plusieurs organisations -revendiquant la majorité de l’intersyndicale- ont même déposé une plainte le 22 avril au parquet national financier qui vise le secrétaire général de l'Elysée Alexis Kohler, le PDG de Veolia Antoine Frérot, le président du conseil d'Engie Jean-Pierre Clamadieu et le PDG du fonds Meridiam Thierry Déau. Ils dénoncent tout à la fois "l'intervention de l'Elysée bien en amont de l'annonce publique du projet" de fusion et les "pressions régulières et répétées pour faire aboutir" le rapprochement. Ils rappellent aussi la déclaration publique en septembre du Premier ministre Jean Castex en faveur d'un rapprochement qui "fait sens", une position "bien au-delà de la neutralité que la loi impose normalement au pouvoir politique". A noter que Bruno Le Maire – qui s’était montré dans un premier temps très hostile à l’offre de Veolia- n’est pas dans la ligne de mire des syndicats de Suez. C'est pourtant bien le ministre de l’Economie, des Finances et de la Relance qui a, selon L’Obs, organisé le 8 avril à Bercy avec le directeur du Trésor, Emmanuel Moulin et celui de la Caisse des dépôts, Eric Lombard, une réunion visant à rapprocher les parties. Il a ensuite célébré l’accord du 12 avril qui selon lui "préserve l’emploi".
L'AMF prise à partie
La réunion de Bercy permettant de siffler la fin de la partie s'est tenue quelques jours après la publication, le 2 avril, d’un communiqué de l'Autorité des marchés financiers (AMF) appelant à la recherche d’une "solution négociée" mais recadrant certains procédés utilisés par Suez dans le cadre de sa défense. Une prise de position, qui a fait basculer le feuilleton vers un happy end pour Veolia, provoquant du même coup beaucoup de ressentiment du coté de Suez. La direction du groupe avait alors parlé d’une position "incompréhensible et favorisant une nouvelle fois Veolia adoptée via un processus décisionnel inacceptable car ne respectant pas les droits les plus élémentaires de Suez".
Changement de registre
Dans leur communiqué du 22 avril, les syndicats jouent sur le même registre dénonçant la prise de position de l’AMF qui, selon eux, a été publiée "sans aucune sollicitation, ni aucune compétence juridictionnelle, menaçant en dehors de toute légitimité les opérations de résistance de Suez face à l'OPA de Veolia". Entretemps, avec l’accord du 12 avril, la direction de Suez a changé de registre, se montrant beaucoup moins agressive. Philippe Varin, président du conseil estime ainsi que l'accord "reconnaît la valeur de Suez". Et Bertrand Camus, le directeur général, qui s'est battu des mois pour trouver une "offre alternative", estime aujourd'hui que celle de Veolia donne "toutes ses chances à l’obtention d’une solution globale qui offrirait les garanties sociales indispensables pour l’ensemble des salariés".
Affaire non conclue
L’affaire n’est pas tout à fait finie puisque, on l'a bien compris, seul un "accord de principe" a pour l'instant été conclu. Les forces en présence sont toujours à la manoeuvre, notamment pour constituer le tour de table du "nouveau Suez". Philippe Varin a expliqué publiquement qu’il serait "vigilant" d’ici à la signature de "l’accord permettant de mettre fin au conflit ". Façon de dire, en creux, que le dit conflit n'est pas terminé? Gageons que la vigilance de Marc Sénéchal et Gérard Mestrallet épargnera à la place de Paris un nouveau coup de théâtre dans cette bataille fratricide.
GDF SUEZ VEOLIA
Gapping down
In reaction to earnings/guidance:
- QDEL -12.9% (issues downside Q1 rev guidance; also completes distribution agreement with MCK), KMB -4.4%, AXP -3.2%, INTC -2%, STX -1.9%, HON -1.6%
Other news:
- EDAP -11.1% (prices offering of 4.15 mln ADS's at $6.75 per share)
- THC -7% (Glenview Capital lowers stake to 9.99% from ~12.9%)
- CI -1.6% (MOH to acquire CI's Texas Medicaid and Medicare-Medicaid Plan contracts)
Analyst comments:
- HOG -2.4% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
- KHC -0.8% (downgraded to Neutral from Overweight at Piper Sandler)
Gapping up
In reaction to earnings/guidance:
- SKX +9.3%, SAM +8.3%, MAT +6.2%, SNAP +4.9%, BJRI +4.3%, ALV +4.1%, HTH +3.8%, SIVB +3.5%, BHR +3.1%, CE +3%, VICR +3%, WWE +2%, RF +2%, SXT +2%, OZK +1.7%, SLB +1.4%, CAMP +1.3%, KN +1.2%
Other news:
- SLAB +18.1% (SWKS to acquire the Infrastructure & Automotive business of SLAB for $2.75 bln)
- EBSB +12.2% (INDB to acquire EBSB)
- DMTK +9.1% (launches DermTech PLAplus for early detection of melanoma)
- SKLZ +8.8% (Cathie Wood's Arkk investment purchased 122K shares yesterday)
- SD +4.9% (acquires overriding royalty interest assets of SandRidge Mississippian Trust for $4.85 mln)
- SWKS +4.1% (SWKS to acquire the Infrastructure & Automotive business of SLAB for $2.75 bln)
- ANAB +3% (FDA approves GSK's Biologics License Application for JEMPERLI)
- NVAX +2.2% (reports Phase 2b trial results published in The Lancet)
- OLED +1.8% (extends long-term OLED agreements with Visionox)
- ILMN +1.6% (ILMN and Kartos Therapeutics announce deal to co-develop a TP53 companion diagnostic)
Analyst comments:
- MAX +2.4% (upgraded to Overweight from Neutral at JP Morgan)
- OVV +1.5% (upgraded to Outperform from Peer Perform at Wolfe Research)
- MRO +1.3% (upgraded to Outperform from Peer Perform at Wolfe Research)
- AAL +1% (upgraded to Mkt Perform from Underperform at Raymond James)
Early premarket gappers
- Gapping up:
- SLAB +14.1%, EBSB +12.1%, SKX +10.1%, SAM +6.9%, ABCB +5.5%, SNAP +5.4%, MAT +5.4%, ALV +5.1%, SD +4.9%, DMTK +4.9%, RF +4.5%, BJRI +4.3%, VICR +4.2%, HTH +3.8%, SIVB +3.7%, WWE +3.1%, CE +3%, SWKS +2.6%, ANAB +2.1%, OLED +1.8%, OZK +1.7%, AMD +1.4%, NVAX +1.3%, VRSN +1.2%, KN +1.2%, DAL +1%
- Gapping down:
- QDEL -14.6%, EDAP -13.5%, THC -7%, INTC -2.7%, STX -2%, BHR -1.9%, CI -1.6%, FFBC -0.6%, VRT -0.5%, ADVM -0.5%, MSON -0.5%