Gapping up
In reaction to earnings/guidance:
- SNBR +12.7%, TWLO +10.1%, WK +8.2% (also CFO to retire), MANT +6.7% (also increases dividend), TSLX +5.9%, BCOV +5.7%, CYH +5.5%, NTR +5.4% (also increases dividend slightly, approves repurchase of 5% of shares), EIG +5.2%, MX +5%, SKT +4.8%, FVRR +3.8%, LXP +3.8%, WST +3.5%, TECK +3%, CTRN +2.8%, TLRY +2.6%, NVTA +2.3%, RGR +2.2%, PAAS +2%, GFI +2%, MOS +1.9%, GOLD +1.9%, GTLS +1.9%, IAG +1.8%, LOPE +1.6%, CAKE +1.4%, LASR +1.2%, CBZ +1.1%, LKQ +1%
Other news:
- CAPA +57.2% (HighCape Capital Acquisition Corp and Quantum-Si entered into a definitive business combination agreement)
- CBLI +29.2% (files Form S-4 in connection with its previously announced merger agreement with Cytocom)
- RIGL +25.2% (Eli Lilly and Rigel Pharmaceuticals (RIGL) announce a global exclusive license agreement and strategic collaboration to co-develop and commercialize Rigel's R552, a receptor-interacting serine/threonine-protein kinase 1 inhibitor, for all indications including autoimmune and inflammatory diseases)
- SFTW +19.6% (Osprey Technology Acquisition Corp enters into definitive agreement for business combination with BlackSky Holdings, resulting in BlackSky becoming publicly listed company)
- NEPT +5.2% (announces favorable decision in dispute with Azpa Pharmaceuticals)
- CPG +4.8% (to acquire Shell's Kaybob Duvernay assets in Alberta for $900 mln)
- CGNT +4.2% (move attributed to positive Whitney Tilson mention)
- PRVB +4.1% (announces collaboration to commercialize PRV-3279 in Greater China)
- IMUX +4% (reports "positive" top-line data from investigator-sponsored phase 2 clinical trial of IMU-838 in primary sclerosing cholangitis)
- SEEL +3.9% (signs amendment to repurchase portion of royalties for SLS-002)
- CSV +2.8% (extends term of employment agreement for CEO)
- OZON +2.4% (announces the final pricing of the offering of $750 mln in aggregate principal amount of senior unsecured convertible bonds due 2026)
- AXGN +1.9% (completes pilot phase analysis for REPOSE clinical study)
- RDHL +1.8% (announces manufacturing agreements with Cosmo Pharmaceuticals for Movantik and RHB-204)
- VTVT +1.4% (initiates phase 1 study for HPP737)
- MTDR +1.3% (reports 7% yr/yr increase in total proved reserves)
- EQH +1.3% (authorizes $1 bln share repurchase program)
- MYOV +1.3% (MYOV and PFE announce journal publication for Phase 3 LIBERTY studies), .
Analyst comments:
- WFC +0.7% (upgraded to Neutral from Underweight at JP Morgan)
- SNDX +0.7% (initiated with a Buy at B. Riley Securities)
- TENB +0.6% (resumed with a Buy at Stifel)
- INFY +0.5% (initiated with an Overweight at Piper Sandler)
Early premarket gappers
- Gapping up:
- CAPA +50.2%, CBLI +47.4%, CPG +15.8%, SNBR +12.7%, TWLO +10.5%, MANT +10.1%, WK +10.1%, CYH +7.1%, TLRY +6%, TSLX +5.8%, AXTA +5.6%, NTR +5.4%, MX +5.3%, EIG +5.2%, FVRR +4.8%, CGNT +4.2%, PRVB +4.1%, LXP +3.8%, LKQ +3.3%, CSV +2.8%, GOLD +2.4%, RGR +2.3%, TECK +2.3%, MYOV +2.1%, VMI +2.1%, PAAS +2.1%, SKT +2.1%, WST +2%, TPH +1.9%, GFI +1.7%, OZON +1.6%, LOPE +1.6%, ZG +1.4%, EQH +1.3%, BCOV +1.3%, NVTA +1.2%, LASR +1.2%, SO +1.2%, MOS +0.9%, IART +0.8%
- Gapping down:
- SM -9.7%, MTEM -9.6%, IQ -9.6%, QTWO -9.3%, STMP -9.2%, AM -9.2%, NICE -8.3%, SPWR -7.7%, VERU -6.3%, FSLY -6.1%, SAM -5.7%, FTI -5.3%, MD -5.3%, SI -5.1%, SNN -5.1%, GMED -4.1%, ALB -3.7%, HLF -3.3%, ORAN -3.2%, SITM -3.1%, KAR -3%, BCS -3%, CDE -2.7%, RBBN -2.7%, AEL -2.6%, BNTX -2.5%, RPT -2.1%, ET -1.7%, UGI -1.6%, UCTT -1.6%, BRP -1.4%, CS -1.2%, YMAB -1%, BIDU -1%
Everything’s Glittering Except Gold
In the current market frenzy, the original speculative asset is struggling to capture investors’ imaginations
You have to feel a little sorry for investors in gold. Central bankers and finance ministries have opened the cash sluices, and what looks like a speculative boom is under way in many corners of global financial markets. But over the past 12 months, the yellow metal—the original darling of skeptics of spendthrift governments—has underperformed the S&P 500.
At a bit below $1,800 a troy ounce, gold prices are far below the highs of around $2,050 reached in early August.
Watching bitcoin hit $50,000, SoftBank’s stock price surpass its dot-com boom high and even silver catch a bid from retail traders must be particularly difficult for holders of gold. Many had expected that the original speculative asset would prosper under the unusual market conditions of the past year.
Bank of America commodity analysts announced an 18-month gold price target of $3,000 in April, before paring it back later in 2020. That forecast was made on the reasonable-seeming assumption that the bulging balance sheets of major central banks and huge fiscal rescue packages would be a boost to the asset most traditionally favored by investors worried about government profligacy.
But it simply hasn’t worked out that way. The metal’s recent performance should be confirmation, if any were really needed, that buyers of gold are really just buying inflation-protected government bonds under a different name. Since 2005, the yield on 10-year TIPS—inflation indexed U.S. government bonds—has had an R-squared relationship of 0.81 with the daily price of gold, meaning the moves in one explain the majority of moves in the other.
A plethora of other explanations for gold prices, like physical demand, flows from central banks and the rising popularity of exchange-traded funds may have some meaning, but those have been minnows in terms of their impact on the direction of prices. If real interest rates aren’t falling, it is hard for gold to sustain any meaningful gains. If they aren’t rising, it is hard for gold to fall much. Beyond that, there isn’t much going on except to the most committed and involved analysts.
So what happens to the price now mostly depends on your view of the Federal Reserve’s actions and the capacity of the U.S. economy: 10-year market inflation expectations are at their highest levels since mid-2014, but bond yields have risen to match.
Investors who have a strong view on whether inflation is coming and if so whether the Fed would react quickly against it might make a bet on gold. Otherwise it is hard to see the appeal.
>>> Up
* Aviva Raised on Buyback Potential, Risks Skewed to Upside: Citi
* Beiersdorf Raised to Buy at LBBW; PT 98 euros
* Credit Agricole Raised to Add at AlphaValue
* Dermapharm PT Raised to 72 euros from 53 euros at Berenberg
* Derwent London Raised to Buy at Liberum
* Infineon PT Raised to 45 euros from 17 euros at Berenberg
* Klovern Raised to Buy at SEB Equities; PT 15 kronor
* NRC Raised to Hold at DNB Markets; PT 16 kroner
* NRC Raised to Hold at DNB Markets; PT 16 kroner
* Sage PT Raised to 830 pence from 780 pence at Jefferies
* SSP Raised to Overweight at Morgan Stanley; PT 350 pence
* STMicroelectronics Raised to Hold at Berenberg; PT 39 euros
>>> Down
>>> Down
* Daetwyler Cut to Add at Baader Helvea; PT 319 Swiss francs (+)
* FLEX LNG Cut to Hold at Danske Bank Markets; PT 80 kroner (+)
* K+S Cut to Hold at Commerzbank; PT 10 euros
* Lancashire Cut to Add at Numis
* Lancashire Cut to Add at Numis
* NN Cut to Accumulate at KBC Securities (+)
* Stora Enso Cut to Neutral at Citi; PT 17.10 euros
* Subsea 7 Cut to Hold at Jefferies; PT 90 kroner
* Telia Cut to Underweight at JPMorgan; PT 33 kronor
>>> Initiation
>>> Initiation
* Genel Rated New Hold at Renaissance Capital; PT 170 pence
* Gulf Keystone Petroleum Reinstated Buy at Renaissance Capital
* DNO Rated New Hold at Renaissance Capital; PT 8 kroner
>>> Call
* DNO Rated New Hold at Renaissance Capital; PT 8 kroner
>>> Call
* Airbus 4Q Beat Across the Board, Guidance Looks Light: Bernstein
* Auto Chip Shortage Positive for Infineon, STMicro: Berenberg
* Auto Chip Shortage Positive for Infineon, STMicro: Berenberg
* Atos Results ‘Decent,’ Though Guidance Upside Limited, Oddo Says (+)
* Barclays 4Q a Beat, But Outlook Lacking in Detail, Citi Says (+)
* Carrefour’s FY Results a Step in the Right Direction, Says Citi (+)
* Credit Suisse 4Q Results a ‘Messy Non-Event,’ Citi Says (+)
* K+S Cut to Hold By Commerzbank as BaFin Orders Accounting Probe (+)
* Liberum Sees 2021 Gains in U.K. Property Stocks; Derwent Raised
* Orange Results, Outlook in Line With Expectations, Goldman Says (+)
* Premier Foods’ Note Repayment Improves Balance Sheet: Peel Hunt (+)
* ‘Attractive’ SSP Group Upgraded to Overweight at Morgan Stanley (+)
* Subsea 7, Saipem 4Q’s to Disappoint on Limited Awards: Jefferies
* Telia Targets Ambitious, Execution Uncertain, JPMorgan Says (+)
* Temenos 2021 Guidance ‘Reassuring,’ Focus Now on Mid Term: Citi
* Varta Guidance Weak, Topline Beat Low Quality: Commerzbank (+)
Air France-KLM warns of more pain to come after €7.1bn loss
Franco-Dutch carrier expects to fly at only 40% pre-crisis capacity in ‘challenging’ first quarter
Air France-KLM has warned that there is more pain to come for the Franco-Dutch carrier as the fallout from the pandemic pushed it to an annual €7.1bn net loss.
The struggling airline warned of a “challenging” first quarter and a deeper hit to earnings before interest, taxes, depreciation, and amortisation than the loss of €407m in the fourth quarter as the coronavirus crisis ravages the travel industry.
Air France-KLM expects to fly 40 per cent of its pre-crisis capacity in the first three months of the year as restrictions on travel keep people at home.
Ben Smith, chief executive, said the pandemic was “the most severe crisis ever experienced by the air transport industry”.
A year into the pandemic, the sector and its stretched balanced sheets are facing another summer in which tourists are unable to fly, raising the prospect of additional state support.
The group’s fourth-quarter net loss of €1bn was less severe than analysts had forecast. Air France-KLM “expects recovery in the second and third quarter” as coronavirus vaccinations are rolled out.
Analysts, however, are less optimistic.
“Without a meaningful acceleration in vaccinations, we worry that European governments will not have enough conviction to remove penalising restrictions on air travel in time for summer travel — testing airlines’ balance sheets, and their investors’ resolve,” said Daniel Roeska at Bernstein.
The headline loss included restructuring charges linked to lay-off plans. Air France-KLM last year slashed thousands of jobs, and took on billions in state-back loans, to weather the Covid-19 crisis.
The airline, created in 2004 by the merger of France’s flag carrier with the Netherlands’ own national champion, is in conversations with the French and Dutch governments, as well as the European Commission, about further assistance.
The expectation, said Air France-KLM, is that a recapitalisation is close. The carrier said on Thursday that it continued to “work on quasi-equity and equity solutions . . . and expects progress in the following weeks”.
However, the talks have been hung up for weeks. The EU has been pushing Air France-KLM to give up slots at Paris Orly airport in exchange for aid, according to people familiar with the matter.
“The French and Dutch governments recognise the importance of airlines to their national economies and will maintain operations,” Bernstein’s Roeska said.
“The scale of the hole in AF-KLM’s balance sheet is large, and incremental debt-carrying capacity so small, that a substantial dilution looks highly probable with few alternative ways out,” he added.
Melvin Capital Says It Was Short GameStop Since 2014
Hedge-fund manager Gabe Plotkin defends short-selling strategy in House testimony
Melvin Capital Management had been betting against GameStop Corp. GME -7.21% since 2014 and still believes online videogame downloads will overtake the retailer’s business model, the hedge fund’s founder said in an advance copy of his congressional testimony made public Wednesday.
Gabe Plotkin’s Melvin Capital lost more than 50% on its investments in January as losses piled up from its short bets against GameStop and other companies. GameStop had been touted on the Reddit forum WallStreetBets and some other social-media platforms, with its surging stock prices damaging the returns of several high-profile firms including Steven A. Cohen’s Point72 Asset Management and Daniel Sundheim’s D1 Capital Partners.
The action in GameStop was fueled partly by an army of bullish individual traders urging one another on platforms like Reddit to buy shares and options and squeeze Melvin, a particular target of posters. GameStop’s seemingly relentless march upward also created what traders described as a sort of contagion effect. Managers lost confidence in their short positions and covered those bets while also trimming their stakes in other companies to reduce risk in their portfolio.
GameStop’s seemingly relentless march upward also created what traders described as a sort of contagion effect, with managers losing confidence in their short positions and covering those bets. These managers also trimmed their stakes in other companies to reduce risk in their portfolios.
The episode has generated questions about the market’s integrity and set off federal probes into possible market manipulation. Prosecutors have subpoenaed information from brokers such as Robinhood Markets Inc., the popular online brokerage that many individual investors used to trade GameStop and other shares.
The House Financial Services Committee will hold a hearing Thursday to examine what happened with GameStop’s shares. Ken Griffin, of Chicago hedge-fund Citadel LLC and market maker Citadel Securities; Robinhood co-founder Vlad Tenev ; Keith Gill, the once-anonymous trader who goes by the online alias “Roaring Kitty,” and others are expected to testify.
In his prepared testimony, Mr. Gill said that he is an individual investor posting on social media about trading, rather than someone trying to drive up prices of GameStop shares.
“The idea that I used social media to promote GameStop stock to unwitting investors is preposterous,” Mr. Gill wrote. “I was abundantly clear that my channel was for educational purposes only.”
Mr. Gill echoed sentiments shared by many individual investors who have been stuck at home during the coronavirus pandemic, as millions of new traders have jumped into markets to take advantage of their wild swings. He said that hedge funds and other Wall Street firms have “teams of analysts working together” on research, something many individual investors don’t have access to.
“Social media platforms like YouTube, Twitter, and WallStreetBets on Reddit are leveling the playing field,” Mr. Gill said.
Robinhood’s Mr. Tenev used his written testimony to address concerns raised by critics and members of Congress that the stock-trading app encourages excessive risk-taking. Only about 2% of Robinhood’s users are active day traders, meaning they make four or more trades in a period of five business days, Mr. Tenev said in his prepared remarks.
“What we see is generally not consistent with popular memes suggesting that most of our brokerage customers are unsophisticated day traders taking inordinate risks with large sums of money on complex financial products,” Mr. Tenev wrote.
He also used his testimony to explain Robinhood’s decision to curb trading in GameStop and other highflying stocks during the last week of January. A dramatic increase in the amount of money Robinhood had to place on deposit at the clearinghouses that complete customer trades prompted the company to prevent users’ from buying shares in GameStop and other companies, Mr. Tenev said. He denied that the moves came at the request of any hedge funds that were squeezed by a rally in those stocks.
Mr. Tenev wrote that “any allegation that Robinhood acted to help hedge funds or other special interests to the detriment of our customers is absolutely false and market-distorting rhetoric.”
Mr. Griffin, in prepared testimony, said he played no role in Robinhood’s controversial decision to curb trading in GameStop at the height of the stock’s rally. He also plans to defend the role of Citadel Securities in the GameStop episode. Citadel Securities executes many of the orders submitted by small investors using online brokerages like Robinhood and TD Ameritrade.
Like other high-speed trading firms, Citadel Securities pays the brokerages for the right to trade against their customers’ orders, a controversial practice that has drawn fresh scrutiny in the wake of the GameStop frenzy. Such payments are “a key reason why retail investors are able to trade for free or low commissions today,” Mr. Griffin said.
On Jan. 27, at the height of the GameStop rally, and a record day for overall stock-market trading volumes, Citadel Securities executed 7.4 billion shares’ of trades for retail investors, more than the average daily volume of the entire U.S. stock market in 2019, Mr. Griffin said, underscoring the firm’s huge role in the marketplace.
“During the period of frenzied retail equities trading, Citadel Securities was the only major market maker to provide continuous liquidity every minute of every trading day,” he added, referring to glitches that hit several rival high-speed trading firms on Jan. 27.
In his testimony, Mr. Plotkin said a group on Reddit began posting about Melvin’s positions in January using information from regulatory disclosures it had made. He said posts were often “laced with anti-Semitic slurs directed at me and others.” He said he also received profane and racist text messages.
He said Melvin covered its GameStop short “because something unprecedented was happening” and took losses on other positions that were being written about on social media.
More generally, Mr. Plotkin offered a defense of short selling, saying that Melvin’s short positions don’t prevent a company from accomplishing its goals and aren’t an attempt to artificially depress the share price of a company. He also said shorts act as a hedge that limit losses for Melvin’s hundreds of investors when markets drop.
He took issue with reports saying Melvin had been bailed out. Citadel LLC, its partners and Point72 invested $2.75 billion into Melvin as its losses mounted in January and, as part of the deal, took a non-controlling revenue share in the firm for three years.
“Citadel proactively reached out to become a new investor…It was an opportunity for Citadel to ‘buy low’ and earn returns for its investors if and when our fund’s value went up,” the testimony reads.
Thursday’s hearing is the most public appearance by Mr. Plotkin, 42, a former top portfolio manager for Mr. Cohen who has kept a low profile despite Melvin’s strong performance. Off Wall Street, he is best known for owning a minority stake in the NBA basketball team the Charlotte Hornets with Mr. Sundheim.
Melvin and other funds have recovered at least some of their losses in February.
Melvin is up double-digits for the month, said a person familiar with the fund. Point72, which has been an investor in Melvin since its founding, also has made money in February, said people familiar with it.
- Daimler (DAI TH) +1.6%
- *DAIMLER SEES 2021 SALES, REV, EBIT SIGNIFICANTLY ABOVE 2020
-
Barclays (BCY TH) +1.4%
- TOPLive Starts: Follow Barclays Quarterly Earnings in Real Time
- Barclays 4Q CIB Revenue Beats Estimates
- Adyen (1N8 TH) +0.9%
- Total SE (TOTB TH) +0.9%
- ING (INN1 TH) +0.9%
- Siemens Healthineers (SHL TH) -0.8%
-
Equinor (DNQ TH) -0.8%
- Equinor ASA: Equinor’s share saving plan allocates shares
- ProSieben (PSM TH) -0.9%
- TeamViewer (TMV TH) -1%
- CD Projekt (7CD TH) -1.1%
- Rolls-Royce (RRU TH) -1.4%
-
Airbus (AIR TH) -3.3%
- Airbus Cautious on 2021 After Cementing Cash Flow Turnaround
-
MTU Aero (MTX TH) -3.7%
- MTU Aero Sees 2021 Adjusted Ebit Margin 9.5% to 10.5%
- Varta (VAR1 TH) -6.2%
- Varta FY Adjusted Ebitda EU239M Vs. EU97.5M Y/y
- Thyssenkrupp (TKA TH) -10%
- Thyssenkrupp Ends Steel Sale Talks With Liberty Over Value (1)
Related tickers:
Airbus expects deliveries to remain at 2020 levels
Airline manufacturer withholds dividend and reports operating loss
Airbus expects deliveries of commercial aircraft this year to remain at 2020 levels, describing a “volatile environment” due to the coronavirus pandemic, and has withheld its dividend.
The European aerospace manufacturer delivered 566 commercial aircraft in the 12 months to the end of December, down from 863 aircraft in the same period a year earlier, it said in a statement on Thursday.
For the full year, Airbus swung to an operating loss of €510m from a profit of €1.3bn, while revenues fell 29 per cent to €49.9bn.
Assuming no further disruptions to the global economy and aviation, the company said it expected to deliver the same number of commercial aircraft in 2021 as last year and targeted an adjusted operating profit of €2bn.
“Many uncertainties remain for our industry in 2021 as the pandemic continues to impact lives, economies and societies,” said chief executive Guillaume Faury.
Pandemic-related travel restrictions and a drop in demand have hit the airline industry, pushing Airbus and its rival Boeing to slash production.
Airbus said last month that it would increase production of its A320 family of aircraft more slowly than expected from 40 to 45 a month by the end of this year.
DAX:
- Daimler (DAI TH) +1.6%
- *DAIMLER SEES 2021 SALES, REV, EBIT SIGNIFICANTLY ABOVE 2020
- Infineon (IFX TH) +0.8%
- Fresenius Medical (FME TH) +0.7%
- MTU Aero (MTX TH) -3.3%
- MTU Aero Sees 2021 Adjusted Ebit Margin 9.5% to 10.5%
MDAX:
- Aixtron (AIXA TH) +1.2%
- Airbus (AIR TH) -2%
- Varta (VAR1 TH) -5.2%
- Varta Sees 2021 Revenue About EU940M
- Thyssenkrupp (TKA TH) -10%
- Thyssenkrupp Ends Talks With Liberty Steel on Steel Unit Sale
- K+S (SDF TH) -14%
- K+S: BaFin Orders Probe of Accounting of Non-Current Assets
SDAX:
- Borussia Dortmund (BVB TH) +3.5%
- DIC Asset (DIC TH) +1.1%
- Dermapharm (DMP TH) +0.9%
- Dermapharm PT Raised to 72 euros from 53 euros at Berenberg
- Schaeffler (SHA TH) +0.9%
- ADVA Optical (ADV TH) -0.9%
- Suedzucker (SZU TH) -1.8%
- ElringKlinger (ZIL2 TH) -3.1%