Gapping up
In reaction to earnings/guidance:
- CSOD +14.9%, KRNT +12.4%, ANDE +8.8%, QS +7.6%, WIX +4.7%, SAH +4.2%, DIOD +3.2%, SEDG +3%, CLR +2.9%, EQT +2.8%, RIO +2.6%, NOMD +2.6%, IRWD +2.5%, A +2.4% (also authorizes $2 bln repurchase program), GRMN +2.3%, OC +2.1%, HEES +2%, BYD +1.9%, GNW +1.9%, CRK +1.4%, WIRE +1.4%, TSEM +1.4%, RPRX +1%, DVN +0.9%
Other news:
- AHAC +13.8% (Alpha Healthcare Acquisition Corp. and Humacyte announces business combination agreement)
- ALT +13.6% (announces FDA clearance of IND for Phase 1 trial of AdCOVID)
- VIR +11.6% (Vir Biotechnology and GSK expand coronavirus collaboration to advance new therapeutics for influenza and other respiratory viruses; GSK is increasing its equity investment by $120 mln and making an upfront payment of $225 mln)
- MESO +8.8% (announces publication of a paper on the first two children treated with Mesoblast's mesenchymal stromal cell (MSC) product candidate remestemcel-L for life-threatening multisystem inflammatory syndrome (MIS-C) associated with COVID-19)
- TPCO +6.4% (to be acquired by Alden Global Capital for $17.25 per share)
- DPW +5.8% (announces that it has amended the terms of its previously announced "at-the-market" equity offering program under which it may sell, from time to time, shares of its common stock for aggregate gross proceeds of up to $125,000,000, inclusive of the previously authorized $50,000,000)
- RDHL +5.2% (doses first patient in US Phase 2/3 COVID-19 outpatient study with RHB-107)
- CHRS +4.9% (FDA has accepted for review the 351(k) Biologics License Application for CHS-1420, a Humira biosimilar product candidate, and has set a Biosimilar User Fee Act action date for December 2021)
- OGE +2.1% (announces support of the merger agreement between Energy Transfer LP and Enable Midstream Partners LP)
- RBBN +1.1% (to sell Qualitech testing and standardization business)
- F +1.1% (says by mid-2026, 100% of its passenger vehicle range in Europe will be zero-emissions capable, all-electric or plug-in hybrid; moving to all-electric by 2030)
- ALSN +1% (announces partnership with American Rheinmetall Vehicles to provide propulsion system for the Lynx vehicle)
Analyst comments:
- ONCY +59.5% (initiated with a Buy at H.C. Wainwright $15)
- MESA +5.7% (upgraded to Buy from Underperform at BofA Securities)
- CREE +3.2% (upgraded to Buy from Neutral at Citigroup)
- CVI +2.7% (upgraded to Neutral from Underperform at Credit Suisse)
- A +2.4% (upgraded to Buy from Neutral at BofA Securities)
- OSK +2% (upgraded to Buy from Hold at Jefferies)
- PLTR +1.5% (upgraded to Buy from Neutral at Goldman)
WSJ : Saudi Arabia Set to Raise Oil Output Amid Recovery in Prices
World’s largest oil exporter plans to reverse recent unilateral production cut, while OPEC-plus seen likely to roll over curbs
Saudi Arabia plans to increase oil output in the coming months, reversing a recent big production cut, say advisers to the kingdom, a sign of growing confidence over an oil-price recovery.
The world’s largest oil exporter surprised oil markets last month when it said it would unilaterally slash 1 million barrels a day of crude production in February and March in an effort to raise prices.
But the kingdom plans to announce a reversal of those cuts when a coalition of oil producers meets next month, the advisers said, in light of the recent recovery in prices. The output rise won’t kick in until April, given the Saudis have already committed to stick to cuts through March.
The advisers cautioned the plans could still be reversed if circumstances change, and the Saudis’ intention hasn’t yet been communicated to the Organization of the Petroleum Exporting Countries, said the people and OPEC delegates.
“We are in a much better place than we were a year ago, but I must warn, once again, against complacency,” Prince Abdulaziz bin Salman, the Saudi energy minister, said at a conference Wednesday. “The uncertainty is very high, and we have to be extremely cautious.”
Oil prices this week returned to levels not seen since the Covid-19 pandemic erupted in early 2020. Brent crude, the international oil benchmark, reached $64 a barrel Wednesday, while West Texas Intermediate, the main grade of U.S. crude, stood at $60.6 a barrel.
The recovery in oil prices has been supported by an unexpected cold spell in the U.S., which has affected short-term crude production. Efforts by producers to reduce supply and rebalance oil markets, led by Saudi Arabia, have also shored up oil futures, analysts say.
The kingdom’s output reduction was more than offset by gains in oil prices, said Kathleen Kelley, head of Queen Anne’s Gate Capital, a New York-based advisory firm.
Despite the recovery, the 13-member OPEC and a Russia-led group of 10 producers—which have been working together to boost prices—are likely to maintain production curbs at their next meeting on March 4, say OPEC delegates.
The informal group of some of the world’s biggest oil producers effectively agreed to maintain their collective oil output at about 7.1 million barrels a day through February. But Russia and Kazakhstan, which had both opposed keeping overall group production flat, were allowed to increase output by a combined 75,000 barrels a day.
Saudi Arabia’s move to reopen the spigots, while the rest of the group keeps them tight, comes as global demand for oil is expected to recover in the coming months.
OPEC expects world oil consumption to rise by 4.72 million barrels a day in the fourth quarter of 2021, compared with the first three months of the year, amid a global economic recovery.
In its monthly market report Feb. 11, the International Energy Agency said that a recovery in demand would outstrip production in the second half of the year, prompting “a rapid stock draw” of the glut of crude that has built up since the pandemic began.
Dogecoin Has a Top Dog Worth $2.1 Billion
A single digital address appears to have accumulated holdings in dogecoin, the cryptocurrency that was started as a joke
The dogecoin market has a pack leader.
Records show that a person, or entity, owns about 28% of all of the cryptocurrency in circulation—a stake worth about $2.1 billion at current prices. The holder’s identity isn’t known, which is common in the opaque world of digital currencies.
It is hard to tell what to make of this giant position in what has long been a small and niche corner of the cryptocurrency world.
Dogecoin was created in 2013 as a satirical homage to bitcoin. Its developers were riffing off the meme of a Shiba Inu dog with bad spelling habits. It wasn’t designed to be used as a form of payment, or as anything except a joke. At the start of 2021, a dogecoin was worth about half a cent, even as bitcoin prices had surged to nearly $30,000.
Things have changed this year. Dogecoin surged in popularity after business and pop-culture icons including Tesla’s Chief Executive Officer Elon Musk, rapper Soulja Boy and “Malcolm in the Middle” star Frankie Muniz began promoting it online. It isn’t clear what caught their attention.
Dogecoin’s price has climbed over 900% this year to 5 cents apiece, according to CoinDesk. That makes the market worth about $6.9 billion, and puts its largest owner’s holdings at roughly $2.1 billion. Like bitcoin, dogecoin is created by a process known as mining: people solve complex mathematical puzzles using computers to unlock new coins.
It is nearly impossible to identify the holder due to the anonymity offered by cryptocurrencies. The account could belong to an exchange on which dogecoin is traded, or to the individuals and groups who run the software that keep the digital currency’s network going, researchers say.
“I doubt anyone has done any serious blockchain analytics on doge,” said Chris Bendiksen, head of research at London-based asset management firm CoinShares. “I can’t even believe we’re having this conversation.”
Research into cryptocurrency transactions has ramped up in recent years. But the focus has been on bitcoin, which crossed $50,000 for the first time Tuesday and rose to a market cap of $940 billion.
What is known is that a single address—the unique identifier of a cryptocurrency account that lets other people find the account on the network—holds about 36.8 billion dogecoin, according to the website Bitinfocharts. That address has held dogecoin since February 2019.
The address also offers an intriguing “Easter egg” for people trying to decipher the identity of the owner: the account has on multiple occasions received 28.061971 dogecoins. Mr. Musk’s birthday is on June 28, 1971.
Tesla and Mr. Musk didn’t return a request for comment.
The billionaire executive on Sunday posted a tweet that appeared to encourage major dogecoin holders to sell most of their coins, after weeks of stoking online interest in the cryptocurrency.
“Too much concentration is the only real issue,” Mr. Musk wrote. “I will literally pay actual $ if they just void their accounts.”
Despite his interest in dogecoin, the major holder’s address is unlikely to belong to Mr. Musk, said Elias Ahonen, author of “Blockland.” Anyone can send dogecoin to a publicly listed address, which could explain the amounts linked to Mr. Musk’s birthday.
Bloated addresses among cryptocurrencies are common. As of January, about 22% of bitcoin belonged to miners and exchanges, according to an analysis by blockchain researcher Glassnode. A miner runs software to verify transactions in the cryptocurrency world, and solves mathematical problems to unlock more newly minted digital currencies.
Exchanges that allow individual investors to buy and sell cryptocurrencies have often used a single address to store clients’ assets offline, called a “cold” wallet. A wallet is a piece of software to hold cryptocurrency balances. For bitcoin, a given exchange might deal with transactions from around 130 million users, many of whom are retail traders.
Some platforms, such as the popular trading app for GameStop and other stocks from Robinhood Markets Inc., don’t allow buyers of dogecoin and other cryptocurrencies to transfer them to their own wallet addresses. They only let traders buy or sell in the addresses that the brokerage uses.
A high concentration of a cryptocurrency being held by one person, or a few people, isn’t cause for concern, Mr. Bendiksen said. Unlike bitcoin, which caps the number of tokens that can be generated to 21 million, dogecoin has no such limits. That means more of the digital currency can be produced even if one buyer tried to corner much of the existing market.
Still, whoever they are, the single holder could shake up the dogecoin market if they drastically cut their holdings, potentially leading to a precipitous drop in its price.
“I would be very nervous about the newcomers who don’t understand how volatile these assets can be,” said Garrick Hileman, head of research at blockchain.com, a cryptocurrency transactions company.
UK house prices rise at fastest rate since 2014, official data show
December surge reflects effect of stamp duty holiday and pandemic lifestyle changes
UK house prices rose at their highest annual rate since 2014 in December, as the effect of government intervention and pandemic lifestyle changes buoyed the property market despite economic uncertainty, according to official data.
Average prices increased 8.5 per cent in the year to December 2020, up from 7.1 per cent in November, reaching a record high of £252,000, the Office for National Statistics said on Wednesday.
The rise reflected the effect of the stamp duty holiday, a tax exemption on the first £500,000 of residential property purchases that will end in March after being introduced by the government in July last year.
The mini-boom was also driven by increased demand, as people trapped inside by months of lockdown reassessed what they wanted from their homes.
“With demand from buyers for more space — both inside and out — outstripping supply, prices inevitably edged upwards,” said Mark Harris, chief executive of mortgage broker SPF Private Clients London.
“Business has remained brisk as buyers try to take advantage of the stamp duty holiday and lenders and solicitors pull out all the stops to get deals across the line before the end of March.”
An increased appetite for space was reflected in growing demand for detached properties, which increased 10 per cent in price in the year to December, compared with a rise of just 5 per cent for flats and maisonettes.
Prices rose fastest in the North West, where they grew 11.2 per cent, compared with a relatively sluggish 3.5 per cent in London which saw the lowest growth.
However analysts said the price surge was unlikely to last long into the new year, as the end of the stamp duty holiday and challenging economic conditions make prospective buyers less willing, and able, to purchase homes.
Estate agents have called for a continuation of stamp duty relief beyond March, but chancellor Rishi Sunak has indicated he is minded to stick to the deadline set out in July.
According to the Nationwide index, released at the beginning of this month, house prices fell 0.3 per cent month-on-month in January. Robert Gardner, Nationwide’s chief economist, said the fall reflected a “tapering of demand” as the added motivation of a tax break ebbed.
Sales, new inquiries and price expectations all softened in December, according to a survey by the Royal Institution of Chartered Surveyors.
“Evidence already is accumulating that prices will fall back this year,” said Samuel Tombs, chief UK economist at consultancy Pantheon Economics, pointing to the Nationwide figures and data from property portal Rightmove, which showed asking price growth fell to 3 per cent in February from 6.6 per cent in December.
“Housing demand also likely will weaken later this year as government support for the labour market is tapered, pushing up unemployment, and as people gradually return to pre-Covid spending habits, leaving less cash left over for housing,” he added.
Early premarket gappers
- Gapping up:
- CSOD +16.7%, MESO +14.2%, KRNT +9.8%, QS +8.6%, TPCO +8%, WIX +6.8%, ANDE +5.8%, SEDG +3.8%, GNW +3.2%, DIOD +3.2%, COMM +2.9%, RIO +2.2%, OC +1.7%, F +1.6%, CRK +1.4%, WIRE +1.4%, RBBN +1.1%, ALSN +1%, A +0.9%, TNET +0.9%, EPIX +0.8%
- Gapping down:
- KAR -18.7%, SHIP -17.3%, AEZS -11.6%, CTXR -11.2%, SNDL -10%, AGFY -9.4%, MERC -7.9%, MVIS -6.5%, HQY -6.1%, LZB -5.2%, BTI -4.5%, CRSP -3.8%, DVN -3.3%, RNG -3%, CHGG -2.9%, EXAS -2.8%, OZON -2.6%, FUN -2.5%, AIG -2.3%, CLR -2.3%, HLT -2.3%, YMAB -2.2%, CAR -2.2%, LSCC -2%, BYD -2%, ACCO -1.8%, SITM -1.7%, DENN -1.3%, GPRE -1%, MORN -1%
EU'S ESMA SAYS THAT ORGANISING OR EXECUTING COORDINATED STRATEGIES TO TRADE IN CERTAIN CONDITIONS TO MOVE A SHARE PRICE COULD CONSTITUTE MARKET MANIPULATION
Kering’s biggest brand Gucci falls short in fourth quarter
Luxury group’s recovery has been slower than larger rival LVMH
Luxury group Kering suffered a sales slowdown during the key Christmas shopping season as Covid-19 lockdowns closed shops across Europe, which hurt demand for fashion and accessories at its biggest brand Gucci.
Quarterly revenue at the group controlled by French billionaire François-Henri Pinault dropped 4.8 per cent on a comparable basis to €4bn, while sales at Gucci contracted 10.3 per cent to €2.3bn. Analysts had expected a 1 per cent increase for the group during the final three months of the year, and a 4 per cent drop for Gucci.
Kering shares opened 7 per cent lower in morning trading in Paris.
The luxury industry has been hit hard by the freeze in international travel that has kept big-spending Chinese tourists away from the fashion capitals of Paris and Milan. But some of the pain has been offset by wealthy customers treating themselves to luxury goods while many types of other spending remain off limits during the pandemic.
To cope with the downturn, Kering and French rivals LVMH and Hermès have sought to cater more to local clientele, while cutting costs, holding digital fashion shows, and significantly expanding online sales.
Kering, whose portfolio of brands also includes Saint Laurent and Balenciaga, enjoyed a big boost to ecommerce last year, which more than tripled compared with 2019 and now accounts for 13 per cent of sales.
Kering’s shares have lagged as investors worry about whether Gucci is losing momentum after years of stellar growth driven in large part by Chinese and younger buyers, who flocked to creative director Alessandro Michele’s colourful vintage-inspired styles. They have fallen about 2 per cent in the past year, compared with a 29 per cent rise for LVMH, which is home to star brands Louis Vuitton and Dior, and a 32 per cent jump for Hermès.
Gucci, which generates most of Kering’s revenues and profits, has struggled more during the Covid-19 crisis than some rivals including LVMH’s top brands, which enjoyed a return to growth at the end of last year.
Gucci’s sales were “disappointing relative to a number of soft luxury peers, such as Vuitton, Dior, Hermès and Kering’s own brands Bottega Veneta or Balenciaga, and should continue to fuel concerns on the brand’s ability to win once again,” said Thomas Chauvet, an analyst at Citi. “On a positive note, Gucci’s profitability was a touch better than expected.”
Kering did not provide financial targets for this year, but said it would propose a stable dividend of €8 per share. Annual sales fell 16.4 per cent on a comparable basis to €15.9bn, while recurring net profit fell 39 per cent to €1.97bn.
“We are emerging from the crisis stronger and better positioned to leverage the rebound,” chairman and chief executive Pinault said in a statement. “We invest in all our brands to maximise their potential, and to resume our profitable growth journey.”
Pro-Independence Parties Win Catalan Elections
For the third time in a row, the Catalan pro-independence movement wins with an absolute majority in the Catalan elections. It has won resoundingly with 74 seats, more than the 68 that establishes the majority (in the previous elections it had won with 70). This time also with 51.22% of the votes, making it the majority among the voters.
The elections were due next year, but they were brought forward because the Spanish courts overthrew Catalan President Joaquim Torra for having disobeyed an electoral board that ordered him to take down a banner criticising the imprisonment of Catalan politicians. The President refused, citing freedom of expression, and the Spanish judiciary considered that the contempt was sufficient to force the removal of the President of the Parliament of Catalonia and cause the elections to be brought forward.
Furthermore, after consulting experts on the pandemic, the provisional Catalan executive decided to postpone the elections for five months until the third wave of Covid-19 had subsided. However, yet again, the Spanish judiciary interfered forcing the elections to be held on 14th February.
This is the same Spanish Justice that keeps 9 Catalan politicians and activists in prison, that has issued search and arrest warrants against 7 exiled Catalan politicians (which the German and Belgian courts rejected because they did not see the accusations as justified or because they understood that there were no guarantees of a fair trial in Spain), it is the same Spanish Justice that maintains the search and arrest warrant against a Majorcan musician –exiled in Belgium– for singing against the King of Spain and that is imminently going to imprison another Catalan musician, Pablo Hasel, for also having sung against the King.
In this context, and despite having the entire state apparatus and the Spanish press against them, independence has won again, and has done so obtaining a larger absolute majority than ever and with over 51% of the votes. In front of the pro-independence movement, we have the former Spanish socialist health minister during the pandemic, who has had the full support of the state, the press and unionism in general, and also the Spanish extreme-right of VOX, which has burst onto the Catalan Parliament with 11 seats.
Given this scenario, the Spanish state and the European Union cannot deny the right of self-determination of Catalan society, which must be expressed in a referendum with democratic guarantees, transparency and without foul play.
All in all, democracy is about allowing citizens to decide at the ballot box, not about violating their will with the application of laws that should in fact serve to guarantee there is a framework that respects what societies want for themselves.
Call for SEC to regulate index providers as investment advisers
Academics say narrower thematic or style approaches should be subject to regulatory scrutiny
Stricter rules should be imposed on providers of financial indices, which underpin trillions of dollars of investment decisions globally, according to a new academic study that calls for action by US regulators.
Index providers, such as S&P Global, MSCI, FTSE Russell and Bloomberg, calculate widely used benchmarks for stocks, bonds and other securities, but these companies are not regulated by the Securities and Exchange Commission, the US investment industry’s main watchdog.
“Certain index providers are presently acting as unregulated investment advisers. The SEC’s failure to recognise this reflects an inadequate and antiquated view of the index fund market,” said Adriana Robertson, a professor at the University of Toronto. Robertson co-authored the paper with Paul Mahoney, a law professor at the University of Virginia.
Robertson said US regulators should treat index providers as investment advisers because of their critical role in designing portfolios of securities that are held by tracker funds. This role is comparable to that of active fund managers, which are regulated as investment advisers and subject to a fiduciary duty standard by the SEC.
Ben Johnson, director of passive funds research at Morningstar, the data provider, said index providers had become de facto asset managers.
“The decisions that index providers make about the companies and countries they include in their benchmarks have a meaningful impact on capital flows around the world. It is an issue that is on regulators’ radar,” said Johnson.
Robert Jackson, when serving as an SEC commissioner in 2019, said that lawmakers should take a more active role in overseeing index providers, given their growing influence in financial markets.
Index providers are currently treated as data publishers by the SEC. Robertson argued, however, that this approach was only appropriate to providers of broad benchmarks, such as the S&P 500 or FTSE 100.
She said the SEC should require companies, such as S&P Global and MSCI, that provide both broad market and narrower focus indices to split their operations. That would facilitate proper regulatory scrutiny of indices used in thematic and smart beta tracker funds and ETFs that have proliferated in recent years.
Implementing such a division is highly unlikely to appeal to index providers as it would increase operational complexities and reduce profits for their businesses.
Robertson also said that index licence fees should be disclosed in a fund prospectus in order to allow investors to make better comparisons with the costs of actively managed funds.
Licence fee rates are based on the value of assets held in a tracker fund and have become a lucrative income stream for index providers as passive management strategies have grown in popularity.
However, the actual value of index licence fees remains a closely guarded secret. Against the backdrop of a brutal price war, asset managers complain in private that index providers remain stubbornly reluctant to reduce the costs of licence fees, even though assets in tracker funds have grown hugely over the past decade.
About $30.7tn is invested globally in passive tracker funds and mandates that follow indices, according to PwC, the professional services provider. Its latest forecast in December projected that passive assets would increase to $40.4tn by the end of 2025, accounting for 29 per cent of the investment industry’s total assets.
Regulations covering index providers were introduced in Europe in 2016 following the Libor scandal, when it was discovered that bankers had colluded to manipulate the London interbank offered rate. Those rules, which aim to ensure that financial benchmarks are transparent, high quality and reliable, have been adopted as global standards.
Rick Redding, chief executive of the Indexing Industry Association, said the call for more regulation was misguided because it was based on a misunderstanding of the differing roles played by index providers and fund managers.
This separation provided additional protection for investors because one set of eyes was devoted to index calculation and a separate set of eyes was responsible for managing the actual investment, said Redding.
“Investors are not able to invest directly in an index. Resisting the temptation to equate apples with oranges when it comes to market indices and the investment products based on them will help alleviate confusion,” he said.