After Hours Summary: Some tech names are down on earnings including AMZN -3.9%, WDC -10.6%, AAPL -2.4%; MTZ +10.5%, WK +6.3%, and TRUP +5.2% catch a bid on earningsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: MTZ +10.5%, RMD +6.6%, WK +6.3%, COG +5.5%, TRUP +5.2%, TWOU +4.8%, VICI +4.6%, BAND +4.2%, ATUS +4%, FBHS +3.3%, STAG +3%, WHR +2.7%, FND +2.5%, MITK +1.8%, TDS +1.8%, NPTN +1.4%, OTEX +1.4%, NFG +0.7%, TNDM +0.7%, FHI +0.6%, RRC +0.5%, CUZ +0.4%, OFC +0.3%, CXP +0.2%, GLPI +0.2%, NATI +0.2%, NTB +0.2%, PVG +0.2%, SEM +0.1%, SYK +0.1%, TEX +0.1%
Companies trading higher in after hours in reaction to news: MGLN +15.3% (to divest its Magellan Complete Care unit to Molina Healthcare for $850 mln), PBYI +4.4% (exclusive agreement wherein Bixink will commercialize NERLYNX in South Korea), DMTK +4.4% (announces availability of telemedicine solution to enable remote use of the DermTech PLA), OTEX +1.4% (collaborates with Amazon Web Services), LB +0.2% (amends revolving credit facility; provides business update)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: WDC -10.6%, HP -7.1%, SWN -6.3%, TEAM -5.1%, ZEN -4.5%, MGM -4.2%, USM -4.1%, AMZN -3.9%, MERC -3.3%, PSA -2.6%, FTAI -2.5%, AAPL -2.4%, AEM -2.4%, GILD -2.3%, UAL -2.1%, CDNA -1.5%, X -1.3%, ILMN -1.2%, EBS -1%, AMGN -0.9%, CLGX -0.9%, FTV -0.9%, V -0.8%, AJG -0.7%, MOH -0.5%, OSIS -0.5%, NCR -0.4%, CRY -0.3%, SWI -0.3%, ATR -0.2%, LOCO -0.2%, SPXC -0.2%, SSNC -0.2%, ASGN -0.1%, CXO -0.1%, EIX -0.1%, EMN -0.1%, SGEN -0.1%
Companies trading lower in after hours in reaction to news: LMT -2.2% (awarded $6.1 bln Army contract), GLNG -1.3% (files mixed securities shelf offering), SSNC -0.2% (acquires of Innovest Systems for a total of $120 mln in cash and stock), WMT -0.6% (launches Express Delivery)
This is a guest post by Robert McCauley, a non-resident senior fellow at Boston University's Global Development Policy Center and senior research associate at the Global History of Capitalism project in the Oxford Centre for Global History at the University of Oxford. In it, he argues that the Fed, in following through on its announced intention to buy junk bonds, should not buy ETFs representing the whole market. Instead, it should buy a more selective, non-indexed mutual fund or individual bonds based on clear, defensible criteria.
In a move that surprised many, the Federal Reserve announced on April 9 that it would buy junk bonds by purchasing exchange-traded funds (ETFs). This followed the announcement on March 23 that it would underwrite and buy investment grade bonds, directly and through ETFs. On April 9, the Fed also extended the March 23 programmes to bonds that had been investment grade on March 22, but had since been downgraded, so-called fallen angels like Ford.
Why is the Fed buying junk bonds?
One argument is to break perverse market dynamics. Wide spreads on outstanding bonds per se may be borne by refinancing firms deleveraging. But if losses from wider spreads lead bond-fund investors to sell their shares, the force of the funds’ fire-selling can lead to a spiral of lower prices and redemptions. Such a run on the market can close the market for new issues. A closed market can in turn lead to defaults, as well as reduced hiring and investment. Corporate defaults impose dead-weight losses on creditors, suppliers, customers and owners that are not limited to legal costs.
Since the emergence of original-issue junk bonds in the 1980s, the primary market for them has closed for a stretch only three times. It closed in 1990, around the failures of Campeau, a leveraged Canadian store chain, and junk underwriter Drexel. On that occasion, the market re-opened only after leveraged buyout (LBO) firm KKR invested more equity in RJR Nabisco, defusing a bond that was supposed to pay an impossibly high yield to trade at par. The market also closed in 2000 following the fraud-related collapse of WorldCom, an aggressive telecommunications firm. And finally, it closed again in 2007-08 during the Great Financial Crisis (GFC).
This time around, amid growing apprehension of the pandemic, investor redemptions of junk bond funds and rising secondary market yields, the primary market closed in the first week of March 2020. It remained closed for over three weeks as investors dumped junk bond funds. But the Fed’s March 23 announcement that it was going to underwrite and buy investment grade bonds led to big issuance by investment grade firms willing to pay up to demonstrate access. Against this backdrop of very large issues marketed by bankers working at home, Yum Brands, the owner of KFC and Pizza Hut brands, braved the junk market on March 30. It sold an oversubscribed issue yielding 3 per cent more than its previous offering. Indeed, in the last week of March, investors returned to net buying of junk bond funds.
Thus, the Fed’s decision to buy junk bonds came before a sustained closure of the market as seen in earlier episodes. Evidently, the Fed’s promise to underwrite and to buy investment grade bonds had already broken the run on that market. The demonstration that big deals could be done at the right price spilled over into the junk market, as did the return of investor buying of bond mutual funds. It is not a criticism to say that the Fed acted before the primary junk bond market disappeared for months.
Should the Fed buy junk bond ETFs that track broad indices?
The $18bn HYG or the $8bn JNK funds track competing dollar junk indices. Buying into them appears an attractive option, allowing the Fed seemingly not to choose what to buy. Consider three possible drawbacks from least to most serious.
First, such indices include bonds of non-US issuers—you might say Yankee junk. One of HYG’s biggest holdings for example is a highly leveraged French-headquartered telecom firm, Altice, with 1.8 per cent weight on April 23. It is easier to argue for buying Sprint with a 2.1 per cent weight, even though it is now owned by Deutsche Telekom’s T Mobile.
Other foreign firms include an Israeli-American drug company, three other European telecom companies, and a couple of European banks. Fidelity’s website features “third-party analytics” that show the US exposure of HYG at 77 per cent of the portfolio. Most of the non-US based issuers probably have US operations large enough to qualify under the equivalent of the Bank of England’s criterion for buying bonds of non-UK firms. That is, they “make a material contribution to [US] economic activity”. Perhaps the completely foreign component of HYG is not a big drawback.
A second drawback is more serious. A low quality bond index weighted by market capitalisation is a crazy idea. In principle, the shakier the bonds that other investors accept, the riskier one’s investment. In practice, as investors reached for yield in the long upswing after the GFC, the index shovelled funds down the rating spectrum away from hedge finance, to speculative finance and then to Ponzi finance. Now, as sales have shrunk and fallen angels like Ford join the index, it reallocates funds toward the top end of junk, the Ba/BB bonds. Should the Fed buy into this the sort of pro-cyclical dynamic?
The third drawback is most serious. The Fed as buyer of last resort should strive for consistency with the Fed as bank supervisor.
Since 2013, US bank regulators including the Fed have urged banks to steer clear of highly leveraged loans that burden firms with debt in excess of six times cash flow. In the event, securities and private equity (PE) firms stepped in to underwrite such loans, while collateralised loan obligations (CLOs) and junk loan mutual funds stepped in as holders of them. While the activity scooted from the banks into shadow banks, thanks to this policy bankers find themselves in a stronger position today. Less burdened with a pipeline of unsaleable loans, they are more able to absorb losses in credit cards and elsewhere. It would be awkward for the Fed to buy junk bonds of firms that resulted from deals that it wisely discouraged banks from joining.
PE firms, including LBO firms, have systematically leveraged the firms that they own above the supervisory guidance. Moody’s published a prescient study in October 2018 entitled “LBO credit quality is weak, bodes ill for next downturn”. The average leverage of firms owned by PE firms exceeded six times cash flow for 13 out of the top 16 PE firms. The overall average for speculative grade debt was 5.3 times. Three of the 13 averaged a ratio over seven of debt to cash flow.
If the Fed buys HYG, what fraction of its investment goes into bonds of highly leveraged firms owned by PE firms? It is easier to pose this question than to answer it. Over half of HYG was rated B or lower by Moody’s at end-February 2020, according to the fund’s annual report. Moody’s found that of 699 junk-rated firms owned by PE, 643 or 92% were B2-rated or below. For the 848 junk-rated firms not owned by PE, only 339 or 40 per cent were rated so low. Could as much as 20-30 per cent of HYG consist of bonds issued by firms that are owned by PE firms? Even if the share is lower because PE firms have found the leveraged loan market more accommodating, should the Fed buy such junk bonds? Groucho Marx refused to join any club that would let him in. Should the Fed join a club that it wouldn’t let banks in?
How should the Fed buy junk bonds?
There are two alternatives. One, the Fed could instead buy a fund like Vanguard’s big open-ended fund that overweights Ba/BB-rated credits. With its low fees, the memorably named VWEAX exceeds HYG in size at $22bn. Bonds rated B2 or below amounted to only 31.4 per cent of the fund at end-March 2020. In buying this fund, the Fed would put much less money into the bonds of highly leveraged PE-owned firms. PE firms are sitting on plenty of “dry powder” to deal with their own progeny, as KKR dealt with financial distress at RJR Nabisco.
Are there technical objections to the Fed buying a non-exchange-traded junk bond fund in an end-day transaction? Whatever they may be, they lose force when one considers the gap between even daily trading of such a fund and trading by appointment in many of the underlying bonds. Should the Fed buy into the even more profound illusion of instant liquidity of junk bond ETFs?
The second alternative is that the New York Fed’s traders could join their counterparts in Europe in rolling up their sleeves to buy individual bonds that meet defensible criteria. In the process, they might just learn how to improve market liquidity. With this approach, one could even imagine the operation morphing from last-resort buying to last-resort dealing.
In short, if the Fed is to buy junk bonds, it should either buy into a thoughtfully constructed fund or buy the underlying bonds itself.
SocGen to revamp trading arm after equities revenue wiped out
CEO Frédéric Oudéa pledges second round of changes in a year after ‘extraordinary’ crisis
Société Générale will revamp the trading arm of its investment bank for the second time in a year after suffering a devastating hit to its core equities business, chief executive Frédéric Oudéa told the Financial Times.
The French bank fell to a shock loss of €326m in the first quarter after revenue in its equity trading unit — long hailed by executives as a key strength — collapsed almost 99 per cent to just €9m.
While its European rivals posted gains of a fifth in similar divisions, SocGen floundered when a rash of companies cancelled dividends to conserve cash during the coronavirus pandemic, which resulted in big losses on equity derivatives linked to potential future shareholder payouts.
“We saw something extraordinary and to a certain extent the worst environment you can imagine for these products,” said Mr Oudéa in an interview on Thursday. “We will have to accelerate the transition to simpler products to limit the impact in such incredible scenarios.”
Mr Oudéa, who has led SocGen for almost 12 years, has been under pressure to revive performance after a string of disappointing results at the investment bank. After a disastrous end to 2018, the bank announced 1,200 job cuts and pledged to remove €500m in costs last April but continued to back the equities division.
The latest turmoil has now forced its management to rethink one of the bank’s historic strengths, reducing the risk the division takes and threatening a vital profit driver.
The Covid-19-related market turmoil that roiled global stock markets and the plummeting oil price “was a kind of stress test,” said Mr Oudéa. “We are going to draw the lessons . . . and accelerate if we can on a certain rebalancing.”
“We have started to simplify the products and also to an extent sometimes make the clients take more risk,” he added. “It’s always a balance between yield and the risk taken on board by the client and the risk that we can try to take on board.”
SocGen’s share price fell 8.6 per cent on Thursday. It has more than halved this year and is one of the lowest-valued lenders in Europe’s struggling financial sector. The bank’s earnings also dragged down domestic peers BNP Paribas and Natixis, both due to report next week.
It was “a bad surprise this morning”, said Citigroup analyst Azzurra Guelfi. Investors will be disappointed “given the extent of the investment bank weakness” compared with peers.
A bright spot for the bank was the €609m in fixed income trading revenues, which came in ahead of the €461m expected by analysts. This time last year Mr Oudéa cut back resources and headcount in the unit but he is now counting on it to help make up the shortfall if equity derivatives are rendered less profitable. He said he would also look to expand retail and private banking.
Echoing moves by European and US peers, SocGen increased its bad loan provisions to €820m — a threefold increase over the same quarter last year, as the sector prepares for a rising number of defaults. The increase included significant losses coming from two frauds involving clients.
A person familiar with the losses said one of them was related to Singapore oil trader Hin Leong, which has filed for bankruptcy and is under police investigation for fraud. SocGen had a $240m exposure to the company.
Mr Oudéa said that under his “base case” scenario, bad loan provisions would total €3.5bn this year but could rise to €5bn if the economic slump was deeper and longer than anticipated.
SocGen also said it would cut an extra €600m to €700m in costs this year using measures such as a hiring freeze and a reduction in the travel and entertainment budget.
The bank has said there will be no decision on job cuts until at least September.
Mr Oudéa told the FT earlier this year of his desire to prepare SocGen for a potential wave of consolidation in European banking. However, he said on Tuesday that, right now, dealmaking was “not the priority, and for management we are dealing with our clients, our staff . . . we have no time.”
It’s over a decade since he won the top job during the 2008 financial crisis, and Mr Oudéa continues to face questions about how long he will stay in the position. He said: “I am here to deal with this crisis, experience of a previous one is a good thing.”
Boeing taps bond market for $25bn to weather cash drain
Aircraft maker says strong demand for offering has removed need for government funding
Boeing’s chief executive David Calhoun said on Monday that the embattled manufacturer of the 737 Max would again turn to capital markets to raise needed cash within the next six months. In the end, it took less than four days to do so.
The aerospace and defence group on Thursday completed a $25bn bond offering to help weather a cash drain of as much as $20bn this year, according to people briefed on the matter.
The offering will add to the almost $39bn in debt the company carried at the end of March.
Boeing said on Thursday evening that the market’s appetite for the bonds eliminated the need for it to seek funding from the US government, a reversal from both Mr Calhoun’s remarks this week and what the Chicago company initially told potential investors.
“The robust demand for the offering reflects strong support for the long-term strength of Boeing and the aviation industry,” the company said. “As a result of the response, and pending the closure of this transaction expected Monday, May 4, we do not plan to seek additional funding through the capital markets or the US government options at this time.”
The debt issuance comes after Boeing reported a $641m net loss for the first quarter and said it would cut 10 per cent of its workforce and reduce production of most of its commercial aeroplanes.
Boeing is struggling not only with the long grounding of its 737 Max but a sharp drop-off in demand as airlines park jets while waiting for pandemic-wary travellers to return to the skies. Revenue at the manufacturer fell 26 per cent, and the company took charges totalling $2.3bn.
Boeing had already moved to buttress its balance sheet this year by borrowing more than $13bn from Wall Street lenders including JPMorgan Chase and Citigroup. It is also seeking US taxpayer funding, and the $2tn Cares Act passed by Congress last month includes $17bn for companies deemed critical to national defence.
The new bond offering is spread across seven maturities from three to 40 years, with 10-year debt paying interest of 5.15 per cent according to people familiar with the pricing. Strong investor demand allowed the company to increase the size of its borrowing, which was initially marketed to investors at above $10bn.
The company agreed to compensate investors if it is cut to junk, according to a prospectus filed with US securities regulators. Analysts with S&P Global on Wednesday had downgraded Boeing to triple-B minus, the lowest rating in investment grade territory, and warned that the company’s “earnings and cash flow are now likely to be much weaker than we expected for at least the next two years”.
Last year, Boeing issued 10-year debt with a yield of 2.96 per cent, underscoring just how sharply its borrowing costs have risen.
Bank of America, Citigroup, JPMorgan and Wells Fargo led the fundraising.
David Dohnalek, a senior vice-president at Boeing, told potential investors in the bond offering on Thursday that the company believed “the additional liquidity from this financing and other potential unsecured liquidity sources, including those that may be available from government-sponsored programmes such as facilities from the Federal Reserve, provides us with enough cushion to manage our business for the foreseeable future”.
Higher production rates are the key to higher profits in the aerospace industry, and Mr Calhoun said on Wednesday that when Boeing stabilised production, “we’ll be in good shape to begin that process of returning money to our lenders”.
“Now at what rate we pay it down is the real question,” he said.
What is the true value of Burford’s $773m claim against YPF?
EY highlights significance of litigation finance company’s action against Argentine oil group
Burford Capital, the Aim-listed litigation finance company, finally published its audited 2019 results on April 28, more than a month later than the originally promised date of March 24. Burford had delayed the release of its audited results even before the UK lockdown order.
It would appear Burford’s auditors at EY in London were asking the company for a great deal of help with their inquiries. At nine pages, EY’s opinion letter is extraordinarily long, but then it had to explain a challenging list of “key audit matters”.
On Burford’s earnings call, Christopher Bogart, chief executive, said “we are thrilled to be presenting our 2019 results”, adding “we’re feeling very good about how 2020 has started off”.
That could be a minority view. According to the slide deck sent before the call, “Burford-only results without third-party interests in consolidated entities, as adjusted” showed a 31 per cent decline in profit after tax to $226m.
The EY audited results cast interesting light on one part of Burford’s “capital provision assets”, which are its claims on YPF, the Argentine national oil company, and by extension the Argentine Republic. YPF claims account for $773m, or 38 per cent of Burford’s capital provision assets, and 53 per cent of the “capital provision income”.
Since July, Argentina has elected an aggressively populist government and is within weeks of formally defaulting on its sovereign debt. This would seem to be a serious challenge for Burford. As EY commented, Burford’s Argentine action “is the most significant of those the company is currently invested in”.
A number of people, myself included, have challenged whether that $773m should be denominated in dollars rather than Argentine pesos with an uncertain future value. On the call Jonathan Molot, Burford’s chief investment officer, sought to reassure investors on this point.
“Basically what would’ve had to happen is the holders of the ADRs would have had to break them apart, exchange them for peso-denominated shares traded in Argentina and then sold them in Argentina, which would be at odds with the bylaws.”
A couple of observations. First, I think the “ADRs” for YPF that Mr Molot is referring to are really ADS, for American Depository Shares, which in an earlier legal form were called American Depository Receipts. So my view is no. Those “holders”, such as Burford, hold ADS “tickets”, traded on the NYSE, that only represent actual YPF shares, which are traded in Buenos Aires in pesos. The YPF “bylaws” to which Mr Molot referred (specifically Section 7) are really translations from the actual bylaws which are based on Argentine law.
Since Burford’s case is filed in the US federal district court in Manhattan, whether it can ever be paid in dollars depends on the relevant precedent for foreign-law judgments. That would be “Die Deutsche Bank Filiale Nurnberg v Humphrey”, which says “the exchange rate from the date of domestic judgment should be used”. That is a lot of pesos to try to change to dollars sometime in the future.
Burford declared a “continuing rapid growth” in annual commitments for litigation. Its portfolio ranges from securities law or corporate claims (such as against YPF) to a German class action for VW owners to mega-divorces in London, between Tatiana and Farkhad Akhmedov.
However, things have not always worked out as Burford might have hoped. For example, in a 2010 opinion (Chevron Corp v Steven Donziger, et al) handed down from the US district court in Manhattan, the judge wrote that the “evidence at trial established that Donziger, a New York lawyer and resident, here formulated and conducted a scheme to victimise a US company through a pattern of racketeering . . . Much of the funding came principally from Kohn in Philadelphia and Burford, which operated at least part in the United States. Absent the US activity, there would have been no scheme.” That opinion was upheld by the New York-based Second Circuit Court of Appeals in 2016.
Burford got out of its funding arrangement with Donziger et al after it had already put up $4m. “Chevron” had been part of its portfolio.
Christopher Bogart and other Burford officers on the call expressed optimism about a post-coronavirus increase in litigation. Yet court backlogs and delays will almost certainly increase. So the present value of that portfolio might decline while the volume goes up.
A Burford April 27 blog note said: “Legal finance is smart money.” Can the same be said of its creditors and shareholders?
Could the art world’s experiment with online fairs force a healthy rethink?
As Frieze New York launches its online viewing room, it might be time to reassess unsustainable practices
frieze.com/fairs/frieze-viewing-room , May 8-15
Frieze New York has hosted tens of thousands of visitors from around the world in its trademark tent on Randall’s Island every May since 2012. Now, in the Covid-crisis world, the thought of travelling to visit one of the world’s most populous cities in order to gather in a crowded venue could not be further from anyone’s minds.
So Frieze has done what others have had to do already this year and taken its 200-plus gallery exhibitors online.
Like other fair organisers, Frieze’s management underlines that its virtual offering is an alternative forced by Covid-19, rather than a replacement for its real-life fairs, and certainly exhibitors are under no illusions on this front.
“There is no substitute to seeing art on the walls,” says Rakeb Sile, co-founder of Addis Fine Art gallery in Ethiopia. This is true in particular for lesser-known, emerging artists, she says. So her gallery’s Frieze New York debut showing of the Ethiopia-born, US-raised painter Tariku Shiferaw is bittersweet.
“This was meant to be his big break in his home town,” Sile says. Yet, she adds, the shift to online has forced a healthy rethink of how best to give a context to Shiferaw’s work — videos on Instagram are among the planned accompanying features.
We don’t yet know what exactly the Frieze Viewing Room will look like, but while there are only so many variables on a flat screen, Loring Randolph, the director of the New York fair, says she has been focused on “recreating the community aspects” of the event as much as possible. For example, there will be live conversations offered each day and curators will present highlights of the fair via video.
When we speak just ahead of the launch, Randolph’s plans also include a visitor book function for each gallery, “to help create a more personalised experience”. Organisers have also added an augmented reality feature to enable would-be buyers to try the works around their homes and gardens, something that will be new to the virtual art fair experience — and may even encourage some Instagram moments.
There have been some changes to what galleries will show, now that the fair has gone virtual. Randolph acknowledges that “certain works don’t translate digitally so well” — such as those made of delicate materials or, of course, anything experiential — but says that galleries are pretty clued-up already. “They’ve been sharing works as jpegs for years, a Viewing Room is just a different context.”
The problem is more that the available content has been a bit overwhelming to date — few people have the attention span to stay in a flat Viewing Room for very long.
“Visitors can’t wander around at their own pace and see what catches their eye, as they would at a real event. So galleries have to distil it right down. You can’t have 20 different works by 20 different artists in hundreds of online viewing rooms, it’s too daunting,” says David Cleaton-Roberts, a partner at Cristea Roberts gallery.
Plus, he notes, there’s the reality that as shippers, photographers, framers and other suppliers have shut down, the ability for artists to complete works to art-fair perfection has also been challenged. He therefore had a rethink about what his gallery will show for the virtual Frieze fair and decided to focus on geometric abstraction — a style that he finds resonates online. Artists will include Anni Albers, Josef Albers and Sol LeWitt alongside living artists such as Rana Begum and Ian Davenport.
The problem is more that the available content has been a bit overwhelming to date — few people have the attention span to stay in a flat Viewing Room for very long.
“Visitors can’t wander around at their own pace and see what catches their eye, as they would at a real event. So galleries have to distil it right down. You can’t have 20 different works by 20 different artists in hundreds of online viewing rooms, it’s too daunting,” says David Cleaton-Roberts, a partner at Cristea Roberts gallery.
Plus, he notes, there’s the reality that as shippers, photographers, framers and other suppliers have shut down, the ability for artists to complete works to art-fair perfection has also been challenged. He therefore had a rethink about what his gallery will show for the virtual Frieze fair and decided to focus on geometric abstraction — a style that he finds resonates online. Artists will include Anni Albers, Josef Albers and Sol LeWitt alongside living artists such as Rana Begum and Ian Davenport.
Marc Glimcher, president of Pace gallery and one of a handful of dealers to speak openly about contracting the virus, says it has been a “reality check” for him in many ways.
“We’ve yet to see that online is a powerful selling tool, especially for very, very expensive things. But it is easier to turn a profit as the costs are less than putting up an exhibition or organising an art fair. Plus, while the process for selling art may not work so well online, the process for selecting and curating has a potentially unlimited richness.
“We should take advantage of that, rather than trying to burn every last dollar of the art economy,” he says.
His gallery’s online exhibitions will include work by the artists Nigel Cooke and Loie Hollowell made in direct response to their life in quarantine. A new work by Cooke — “Oceans” (2020, $250,000) — also features in the gallery’s virtual booth for Frieze.
All dealers recognise that the current situation has accelerated a realistic reassessment of the sustainability of their businesses in the previously relentless art market.
“No one would have wished it, but something had to change anyway,” Cleaton-Roberts says. This applies as much to art fairs as to other parts of a gallery’s business. Glimcher finds that “The art market was kinda crappy already going into this, yet people were in expansion mode, fighting over a pie that was getting smaller.” Now, he says, “I don’t expect a dramatic, post-Covid world, but things will adjust. Art fairs are not going to move completely online — the point of an art fair is to get people together — but that doesn’t have to be every three weeks,” he says.
Sile agrees. “The fair system was getting out of control and we were pressured to do more and more,” she says. “Of course things will be different,” she adds, “It’s a sort of reset of the world.”
frieze.com/fairs/frieze-viewing-room <GO> , May 8-15
>>> Up
* Ageas Raised to Overweight at JPMorgan; PT 43.39 euros
* AO World Raised to Buy at Shore Capital
* Apple PT Raised to $310 from $300 at Piper Sandler
* Apple PT Raised to $326 from $298 at Morgan Stanley
* Atresmedia Raised to Neutral at JPMorgan; PT 2.90 euros
* BioMerieux Raised to Buy at Portzamparc; PT 96.50 euros
* Logwin Raised to Buy at Pareto Securities; PT 152 euros
* Next Raised to Buy at HSBC; PT 5,570 pence
* Storebrand Raised to Buy at Pareto Securities; PT 60 kroner
* TeamViewer PT Raised to 47 euros from 37 euros at RBC
* Trainline Raised to Add at Peel Hunt
>>> Down
* Gilead Cut to Market Perform at Raymond James
* Gilead Cut to Sell at SunTrust; PT $70
* Greggs Cut to Sell at Peel Hunt; PT 1,500 pence
* Hargreaves Lansdown Cut to Hold at Liberum
* IAG Cut to Neutral at Goldman
* ICADE Cut to Reduce at AlphaValue
* Infineon Cut to Neutral at JPMorgan; PT 18.50 euros
* Lundin Energy Cut to Hold at Danske Bank Markets; PT 240 kronor
* Nokian Renkaat Cut to Sell at SEB Equities; PT 17.50 euros
* Oerlikon Cut to Add at AlphaValue
* SAP Cut to Reduce at AlphaValue
* Shell Cut to Hold at Berenberg; PT 16.70 euros
* Shell PT Cut to 1,050 pence from 1,160 pence at Morgan Stanley
* Shell Cut to Hold at HSBC; PT 1,571.79 pence
* Shell ADRs Cut to Hold at HSBC; PT $39.40
* SocGen Cut to Neutral at Citi
>>> Initiation
* AB Dynamics Rated New Buy at Berenberg; PT 2,050 pence
* Accrol Group Rated New Buy at Liberum; PT 75 pence
* Anexo Rated New Buy at Berenberg; PT 190 pence
* SigmaRoc Rated New Buy at Peel Hunt; PT 70 pence
>>> Call
* Greggs Downgraded After Store Reopening Trial Halted: Peel Hunt
* Societe Generale Downgraded at Citi With ‘Bumpy Road’ Ahead
* TeamViewer Well-Placed For Pandemic-Driven Digital Shift: RBC
* Trainline Facing ‘Tricky’ Period But Will Bounce Back: Peel Hunt
U.S. and U.K. futures slid along with Japanese and Australian shares, and the dollar climbed, after sobering comments from Amazon and Apple about the impact of the coronavirus.
Amazon.com warned of a possible second-quarter loss, while Apple omitted an earnings forecast for the first time in more than a decade. While global stocks posted their best month since 2011 in April -- spurred by a slowdown in coronavirus infections and massive stimulus initiatives -- earnings announcements and economic data are serving a reminder of lasting pain.
The dollar halted a four-day slide and Treasuries recouped some recent losses amid the risk-off tone Friday. The yuan retreated. Trading was limited by holidays across much of the Asian region, and most of Europe will also be shut.
US After Hours Some tech names are down on earnings including AMZN -3.9%, WDC -10.6%, AAPL -2.4%; MTZ +10.5%, WK +6.3%, and TRUP +5.2% catch a bid on earnings
Nikkei -2.84% Hang Seng +0.28% CSI +1.18% Shanghai +1.33% Shenzen +1.88%
Eur$ 1.0965 CNH 7.1310 CNY 7.0632 JPY 107.09 GBP 1.2562 CHF 0.9636 RUB 74.7931 TRY 6.9894 WTI$19.30 +2.39%
S&P -1.77% Nasdaq -2.28% EuroStoxx -2.66% FTSE -1.75% Dax -2.38% SMI -2.07%
Macro :
- Einhorn’s Greenlight Hedge Funds Deepen Slump With April Decline
- USO Positions in Oil Futures Contracts to Roll Over 10 Days
- Senate Bill Would Require Consumer Consent for COVID Tracking
- Bill Gates Says Virus Vaccine Could Take as Little as 9 Months
- Junk-Bond ETFs Add Most Since 2015 on Fed’s Fallen-Angel Pledge
- SUVs Get Parked in the Ocean and Reveal Scope of U.S. Car Glut --> Auto Sector should continue to UnderPerf.
Keep an eye on :
- AIR FP : Airbus Shuns Bailout While Plumping for State Aid to Airlines
- ALV GY : Allianz Withdraws Targets Amid Pandemic as Net Income Slumps 30%
- BPOST BB : Bpost Misses Out on Belgian Mask Distribution Contract: De Tijd
- BAR BB : Barco AGM Approves EU2.65 Per Share Gross Dividend, Stock Split
- DAI GY : Daimler Restarts 5 German Plants After Production Suspension
- FCT IM : Navy to Pick Fincantieri in Potential $5.5 Billion Frigate Deal
- GAM SW : GAM Holding Reports Program to Buy Back Shares Over 3-Yr Period
- GRG LN : Greggs Postpones Planned Store Reopenings Next Week: Reuters
- HSX LN : FCA to Seek Legal Clarity on Business Interruption Insurance
- IAG LN : IAG Says Iberia, Vueling Sign Syndicated Financing Agreements
- INTU LN : Intu Properties Received 40% of Rents, Agreed Facility Waiver
- LONN SW : Moderna, Lonza Pact to Manufacture Moderna’s Virus Vaccine (1)
- LHA GY : *LUFTHANSA SAYS LIQUIDITY CURRENTLY STANDS AT MORE THAN EU4B
- LHA GY : Too Much Debt Would Paralyze Lufthansa for Years, CEO Says
- KN FP : Natixis Investors Told to Vote Down CEO Pay by Glass Lewis, ISS
- NOVN SW : Novartis Gets Positive CHMP Opinion for Enerzair Breezhaler
- RBS LN : RBS First Quarter Impairments GBP802 Mln Vs. GBP86 Mln Y/y
- RCO FP : Remy Cointreau Closes Purchase of Maison de Cognac J.R. Brillet
- RNO FP : SUVs Get Parked in the Sea and Reveal Scope of Auto Glut (1)
- RYA LN ; *RYANAIR SEES NET LOSS OF OVER EU100M IN 1Q; FURTHER LOSS IN 2Q
- SAN FP : Sanofi's Cablivi Gets Use Extension Recommendation in Europe
- TKWY NA : Just Eat Board to Be Simplified, Non-Exec Members to Step Down
- TIT IM : Elliott Cut Telecom Italia Stake, Voting Rights: Consob
- TUI LN : TUI Cancels Trips Through June 14, Expects Later Start of Season
- UCB BB ; UCB AGM Approves EU1.24 Per Share Gross Dividend
- VOW GY : Volkswagen Mexico Hopes to Restart Activities by May 18
- VOW GY : Volkswagen Says Lamborghini Prepares to Restart Production May 4