- BBVA (BOY TH) +1.1%
- Sabadell Said to Weigh Options Amid Spain Banking Consolidation
- Qiagen (QIA TH) +1%
- Qiagen Plans Fast Portable Covid-19 Test Launch for November
- Lufthansa (LHA TH) -1.2%
- ASML (ASME TH) -1.3%
- VW (VOW3 TH) -1.3%
- Merkel Holds Firm Against Calls to Give Carmakers More State Aid
- TeamViewer (TMV TH) -1.4%
- Continental AG (CON TH) -1.4%
- Nokia (NOA3 TH) -1.8%
- Dialog Semi (DLG TH) -1.9%
- HelloFresh (HFG TH) -1.9%
- ProSieben (PSM TH) -2.6%
-
AstraZeneca (ZEG TH) -4.7%
- AstraZeneca Vaccine Trials Face Setback After Patient Gets Ill
After Hours Summary: TRIL +31% following trial updates, equity investment; WORK -19% following earnings/guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: QRVO +5.3%
Companies trading higher in after hours in reaction to news: TRIL +31.2% (provided updated data from TTI-622 and TTI-621 studies; announced equity investment from Pfizer [PFE]), MRNA +4.7% (in reaction to vaccine trial hold for AZN), AGIO +1.1% (appointed Jonathan Biller as CFO)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: WORK -18.8%, LULU -5.7%, CASY -4.7%, COUP -4.7%, ABM -2.3%
Companies trading lower in after hours in reaction to news: ATNX -9.1% (announced a public offering of 10.0 mln common shares), AZEK -7.5% (launched secondary public offering of 25.0 mln shares of Class A common stock; announced partial release of IPO lock-up restriction), AZN -6.2% (COVID-19 vaccine trial on hold following suspected serious adverse event, per Stat), VRM -5.3% (commenced public offering of 9.0 mln common shares), QGEN -4.5% (announced launch of rapid portable SARS-CoV-2 antigen detection test), UAA -2.2% (announced $75 mln increase to 2020 restructuring plan)
Closing Stock Market SummaryThe S&P 500 fell 2.8% on Tuesday in a broad-based retreat led by the mega-cap stocks. The Nasdaq Composite underperformed with a 4.1% decline, while the Dow Jones Industrial Average (-2.3%) and Russell 2000 (-2.0%) declined closer to 2.0%.
Today's selling was largely a continuation of last week, but unlike Friday, buyers appeared unwilling to buy the dip. Apple (AAPL 112.82, -8.14, -6.7%) and Tesla (TSLA 330.21, -88.11, -21.1%), which led the market on the way up, led the market lower today, with Tesla shareholders discontent that the S&P 500 Index Committee snubbed the stock from the benchmark index.
Tesla's 21% decline was a drag on the Nasdaq, while Apple's 7% decline pressured the large-cap indices and the S&P 500 information technology sector (-4.6%). The energy (-3.7%) and financials (-2.6%) sectors followed suit amid weaker oil prices ($36.76/bbl, -2.94, -7.4%) and lower Treasury yields, while the utilities sector (-0.6%) declined the least.
Besides concerns that the market's pullback had more room to go, investors had to contend with Democratic leadership rebuffing the Senate's $300 billion coronavirus relief bill, President Trump suggesting disincentives for U.S. companies to outsource jobs to China, and reports that China's largest semiconductor foundry could be added to a trade blacklist.
The prospect of potential retaliation on U.S. semiconductor companies was an additional drag on the Philadelphia Semiconductor Index (-4.7%). Separately, Boeing (BA 161.08, -9.97, -5.8%) provided a disappointing update, saying 787 Dreamliner production problems have slowed the pace of deliveries.
There were some notable winners, though. Nikola (NKLA 50.05, +14.50, +40.8%) and General Motors (GM 32.38, +2.38, +7.9%) formed a strategic partnership that was well-received by investors. Walt Disney (DIS 134.20, +2.21, +1.7%) was upgraded to Buy from Hold at Deutsche Bank.
U.S. Treasuries saw increased buying interest amid the decline in equities but closed off highs. The 2-yr yield declined two basis points to 0.14%, and the 10-yr yield declined four basis points to 0.68%. The U.S. Dollar Index rose 0.8% to 93.46. Oil prices were pressured by Saudi Aramco lowering its prices for buyers in Asia and the U.S. due to sluggish demand.
Reviewing Tuesday's economic data:
- Consumer credit increased by $12.3 billion in July (Briefing.com consensus $12.0 billion) after increasing an upwardly revised $11.4 bln (from $8.95 billion) in June.
- The key takeaway from the report is that July marked the fifth straight monthly contraction in revolving credit, which is something that hasn't happened since late 2010 - early 2011, underscoring the more restrictive credit stance adopted by lenders in the wake of the COVID shutdown and spike in unemployment.
- The NFIB Small Business Optimism Index for August increased to 100.2 from 98.8 in July.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the JOLTS - Job Openings report for July on Wednesday.
- Nasdaq Composite +20.9% YTD
- S&P 500 +3.1% YTD
- Dow Jones Industrial Average -3.6% YTD
- Russell 2000 -9.8% YTD
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We need a new asset class of healthy soils and pollinators
Valuing nature as we do traditional goods and services will help us face 21st-century environmental risks
The Covid-19 pandemic has exposed a fundamental failure in our collective ability to deal with predictable global crises. It should have been a wake-up call and yet we are in danger of sleepwalking into another disaster — this one caused by staggering biodiversity loss.
As governments rebuild and invest in the wake of this crisis, policymakers must learn to value nature, providing the right conditions and incentives to drive change. One important step would be to create a new asset class comprised of things such as productive soils, crop pollination and watersheds. This might sound far-fetched — especially coming from a former US Treasury secretary — but valuing nature as we do traditional goods and services will create incentives to avoid biodiversity destruction, manage climate change and preserve lives and livelihoods. Harnessing the power of markets can protect our environments and prevent its rapid destruction.
With tropical forests in retreat and the extinction of species thought to be about 1,000 times the natural rate, nature’s ability to provide the goods and services on which we depend is being undermined, presenting enormous risks to prosperity. Take, for example, the “service” provided by pollinators — essential to grow fruits, nuts and vegetables — that are dying in record numbers. A total loss of these species could lead to a drop in annual agricultural output of more than $200bn. Add the secondary service of pollinating non-food crops such as alfalfa, the main feed for cattle, and the impact rises to more than $500bn a year. In financial terms, bats, bees and birds are a valuable asset.
The same is true of watersheds. In the 1990s, New York City, for example, improved the ability of the Catskills watershed to filter the city’s water. They paid farmers to use organic products and move animals away from streams, improved sewage systems and established conservation agreements. The result was cleaner water achieved with a $1.5bn investment, compared with up to $8bn needed to build a filtration plant.
Policymakers often consider nature’s benefits “free” so market pricing is difficult, sometimes infeasible, and they are often valued at zero. Conserving the environment is not adequately rewarded financially and damaging it is not appropriately penalised. One result of this failure is an enormous shortfall in the money needed for biodiversity protection, conservation and restoration.
A major report due to be released next week by the Paulson Institute estimates that the current biodiversity financing gap will be over $700bn a year for the next decade. Our report offers a number of policy and financing mechanisms that could help close this gap, but our core message is simple: we must develop innovative financial mechanisms that transform the goods and services provided by nature into asset classes.
This will mean fundamental changes in our thinking. First, we need to look at how subsidies promote “bad behaviour”. Consider that annual subsidies for activities that harm biodiversity, such as $400bn for dirty energy consumption, are at least twice the annual capital flows towards biodiversity conservation. Here, governments must begin the politically fraught process of diverting public funds away from environmentally harmful activities and towards those that protect and sustainably manage nature. This step could help close the funding gap by up to half.
Second, we need to pave the way for more action by the private sector and its substantial financial resources. Companies will not — and cannot be expected to — deploy capital for conservation projects that don’t promise economic returns. That is why governments need to put in place policy measures, such as tax breaks, incentives and regulatory requirements, to encourage investment.
Third, we must improve global co-ordination. It is in the economic interest of the world’s financial institutions to increase their support for biodiversity. The costs of preparing for and preventing Covid-19’s spread, for example, would have been high — but nowhere near those the pandemic has wreaked. What’s more, investments in conservation will help protect against future zoonotic outbreaks. We need to lay the groundwork to ensure our institutions are fit to face 21st-century risks.
This will not happen overnight. There is significant short-term pressure to counter this economic shock. But, as governments consider how to revitalise their economies, they would do well to think long-term and ask how resources can be redirected to projects and initiatives that will not only create jobs and kickstart economies, but also reduce the prospect of future pandemics.
If we learn the lessons of Covid-19, we may be able to avoid the worst outcomes and tragedies of the next predictable crisis. It’s time to approach the biodiversity and climate challenge with the urgency, creativity and political will that it merits — before it’s too late.
Gapping down
In reaction to earnings/guidance:
- ACB -0.5% (guidance update)
Select ETFs showing early weakness:
- XLK -3.5%, QQQ -3.4%, SMH -3.2%, IGV -2.3%
Other news:
- CRBP -73% (announced topline results from the 52-week Phase 3 RESOLVE-1 study of lenabasum in patients with diffuse cutaneous systemic sclerosis)
- TTWO -17.2% (files for 603,817 share common stock offering by selling shareholders)
- SBBP -15.6% (positive and statistically significant top-line results from the pivotal phase 3 Logics study of Recorlev for the treatment of endogenous cushing's syndrome)
- TSLA -13.2% (not added to S&P 500 (expectation that it would))
- DOCU -5.5% (may be related to lack of inclusion in S&P 500)
- RIG -4.5% (files for 67,696,498 share common stock offering by selling shareholder)
- ZM -4.3% (cautious article in Barrons; also - may be related to lack of inclusion in S&P 500)
- FOUR -3.1% (transaction update)
- GERN -1.6% (files for $350 mln mixed securities shelf offering)
Analyst comments:
- NOK -5.4% (downgraded to Mkt Perform from Strong Buy at Raymond James)
- DSX -4.2% (downgraded to Hold from Buy at Pareto)
- PAGS -3.2% (downgraded to Neutral from Buy at Goldman)
- FAST -2.9% (downgraded to Underperform from Mkt Perform at Raymond James)
- WYNN -2.5% (downgraded to Neutral from Buy at Goldman and removed from Conviction Buy List)
- ROP -1.7% (downgraded to Underweight from Neutral at JP Morgan)