After Hours Summary: STMP +32%, ZG +15% and MANT +10% are up big on earnings; TVTY -32% SAM -9%, OSUR -9% are heading lower on earnings
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: STMP +32%, ZG +15.3%, CYH +13.4%, CAR +12.6%, MANT +10.3%, XEC +8.2% (also increases dividend), UCTT +6.7%, PRDO +6%, TRN +5.9%, MX +4.9%, IMAX +4.6%, AGI +3.4%, GDOT +3.3%, SNBR +3.2%, TSLX +2.7%, TSLX +2.7%, LASR +2.6%, SUN +2.2%, PXD +2% (also increases dividend), AJRD +1.6%, ALB +1.5%, OIS +1.1%, MASI +0.8%, O +0.8%, AXTI +0.7%, CLGX +0.4%, HST +0.4%, KBR +0.4%, UFPI +0.4%, IVR +0.2%, SM +0.2%, SUI +0.2%, AROC +0.1%, ES +0.1%, FIVN +0.1% (also to acquire Virtual Observer), HNI +0.1%, OGS +0.1%, OVV +0.1%, SEDG +0.1%
Companies trading higher in after hours in reaction to news: FL +0.7% (increases dividend), BGS +0.7% (to acquire Farmwise), AMSF +0.4% (increases dividend), RMAX +0.2% (increases dividend)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: TVTY -32.4% (also CEO resigns), NVTA -12.8%, SAM -9.2%, BCOV -8.7%, OSUR -8.7%, RBBN -8.3%, LOPE -7.2%, SPTN -6.2%, CPRT -5.2%, INOV -3.2%, QTWO -3.2%, PE -3%, SNPS -3%, CONE -2.4%, CAKE -2.2%, RETA -2.2%, CRMT -2%, JACK -1.9%, KL -1.7%, MOS -1.6%, HCC -1.5%, ALSN -1.4%, NDSN -1.4%, H -1.3%, ET -0.9%, MSA -0.7%, IAG -0.6%, Y -0.3% (also declares $15 special dividend), EIG -0.2%, LSI -0.2%, OR -0.2%, VMI -0.2%, ESRT -0.1%, MGY -0.1%
Companies trading lower in after hours in reaction to news: BTAI -10.3% (stock offering), HRTX -7.2% (announces extension of review period for NDA for HTX-011; new PDUFA goal date is June 26), IRT -4.6% (announces 8.5 mln share offering), TEVA -3.8% (trials for deutetrabenazine fail to meet the primary endpoint), APAM -0.9% (stock offering), TU -0.7% (stock offering)
Boeing asks to give up tax break to avert EU tariffs
Group calls for Washington state to repeal support that has fuelled 15-year dispute with Airbus
Boeing has asked for a $100m a year tax break from Washington state to be suspended in a bid to stop the EU from imposing billions of dollars in retaliatory tariffs this summer, when it is hoping to bring its troubled 737 Max back into service.
Washington state lawmakers on Wednesday introduced bills in the state’s senate and house proposing the end of a business rate tax break for aerospace companies that has saved Boeing more than $1bn since 2004.
The move threatens to nullify Brussels’ argument to the World Trade Organization that Boeing continues to benefit from illegal state aid — the basis on which the right to impose tariffs was expected to be granted later this spring.
Jay Inslee, Washington governor, said Boeing had asked the state to act ahead of expected EU tariffs, the latest sally in a 15-year long dispute between Boeing and Airbus over government subsidies.
Both sides have been found to have received illegal aid in what has become one of the longest-running trade disputes conducted through the WTO.
Boeing said in a statement that the legislation, when passed, would resolve the sole finding against the US in the dispute. It accused Airbus of continuing to benefit from “billions of dollars of illegal ‘launch aid’ subsidies . . . which the WTO has repeatedly found to violate global trade rules”.
Mr Inslee suggested, however, that Boeing had asked for the tax break to be “at least suspended” which could leave leeway for the EU to argue that it could still impose tariffs, if this is sanctioned by the WTO in the coming months.
Last year, the WTO authorised the US to slap levies on $7.5bn of goods after the EU was found to have failed to eradicate illegal support for Airbus aircraft. In October tariffs of 10 per cent were imposed on aircraft imports and 25 per cent on a range of other European goods. On Friday, the levy on aircraft imports was raised to 15 per cent.
Airbus and EU officials have suggested they could win approval for a tariff offensive running to billions of dollars as well.
Guillaume Faury, Airbus chief executive, at the European aircraft maker’s results last week, suggested these would be targeted to make it more difficult for Boeing to deliver its single aisle 737 Max into Europe. The aircraft has been grounded since March after two fatal crashes, but Boeing and its regulators have signalled it could be cleared to fly again later this year.
Both sides have called for a settlement, although neither is willing to make the concessions the other side demands before negotiations begin. Boeing has called for eradication of all government support including launch aid loans.
Washington’s governor said the bill to suspend the tax break had been introduced for fear that EU tariffs “would damage not just our commercial aircraft industry, but other important Washington exports”.
But the change could still take some time to come into effect, he said. “We need careful consideration of the issues and precision work on the legislation which involves not just state tax law, but international trade agreements and domestic trade law,” Mr Inslee said.
Airbus declined to comment.
The battle between Boeing and Airbus dates back to 2004, the year after the European aircraft maker’s deliveries overtook those of its US rival for the first time. The US case challenged subsidies that the European aerospace group had received as long ago as the 1970s. The US has claimed that $22bn in illegal funding has found its way to Airbus.
The EU followed up a few months later with a challenge of its own, alleging that more than $23bn in illegal aid has been channelled to Boeing. In 2010 and 2011 the WTO ruled that both companies had collected billions in unlawful assistance — Boeing from government contracts for defence and space business as well as tax breaks, and Airbus through aid to launch aircraft programmes that was repayable on delivery.
Closing Stock Market SummaryThe S&P 500 (+0.5%) and Nasdaq Composite (+0.9%) closed at fresh record highs on Wednesday, as investors remained optimistic about the global economic outlook despite the coronavirus. The Dow Jones Industrial Average increased 0.4%, and the Russell 2000 increased 0.5%.
In the U.S., building permits climbed to a near 13-year high in January, while China signaled further support for businesses affected by the coronavirus. In addition, the FOMC minutes from the January meeting didn't alter the market's favorable outlook for monetary policy, which is to say that policy could be adjusted if the coronavirus situation doesn't improve.
Although the stock market did lose some steam into the close, the S&P 500 energy (+1.3%) and information technology (+1.1%) sectors still rose more than 1.0%. Energy stocks benefited from a sharp increase in oil prices ($53.32/bbl, +1.22, +2.3%). The defensive-oriented real estate (-1.4%) and utilities (-1.1%) sectors closed noticeably lower.
Apple (AAPL 323.62, +4.62, +1.5%) provided influential leadership for the market while momentum stock like Tesla (TSLA 917.42, +59.02, +6.9%) and Virgin Galactic (SPCE 37.35, +7.05, +23.3%) stayed hot.
Apple's advance today was a testament to the market's view that the coronavirus is a transitory event. Shares recouped most of yesterday's losses following the company's quarterly revenue warning due to the virus. Regarding Tesla, its price target was raised to $928 from $729 at Piper Sandler.
The Philadelphia Semiconductor Index rose 2.6%, thanks to strength in NVIDIA (NVDA 314.70, +18.13, +6.1%), which was upgraded to Outperform from Mkt Perform at Bernstein, and Analog Devices (ADI 123.89, +5.32, +4.5%), which beat earnings estimates.
U.S. Treasuries traded within a narrow range and closed slightly lower. The 2-yr yield increased two basis points to 1.42%, and the 10-yr yield increased one basis point to 1.57%. The U.S. Dollar Index advanced 0.2% to 99.59.
Reviewing Wednesday's economic data:
- The Producer Price Index for January was up 0.5% m/m (consensus +0.1%) and core PPI, which excludes food and energy, was also up 0.5% (consensus +0.1%).
- Notwithstanding the large m/m increases, the key takeaway from the report is that producer prices remain relatively tame on a yr/yr basis, up 2.1% for total PPI and up 1.7% for core PPI. Also, with the Consumer Price Index released last week, it is clear today that there wasn't much bleed-through in January to the consumer side of things from the uptick in producer prices.
- Granted total housing starts declined 3.6% m/m in January to a seasonally adjusted annual rate of 1.567 million (consensus 1.390 million), but that was well above expectations and marked a 21.4% yr/yr increase. Building permits -- a leading indicator -- increased 9.2% m/m to 1.551 million (consensus 1.460 million) and were up 17.9% yr/yr.
- The key takeaway from the report is the recognition that the three-month moving average for starts (1.525 mln) is the highest since January 2007.
- The weekly MBA Mortgage Applications Index fell 6.4% following a 1.1% increase in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for February, and the Conference Board's Leading Economic Index for January on Thursday.
- Nasdaq Composite +9.4% YTD
- S&P 500 +4.8% YTD
- Dow Jones Industrial Average +2.8% YTD
- Russell 2000 +1.4% YTD
Albemarle misses by $0.02, misses on revs; guides FY20 EPS & revs in-line (89.34 +0.64)
Reports Q4 (Dec) earnings of $1.73 per share, $0.02 worse than the S&P Capital IQ Consensus of $1.75; revenues rose 7.7% year/year to $992.6 mln vs the $1006.76 mln S&P Capital IQ Consensus.
Co issues in-line guidance for FY20, sees EPS of $4.80-5.10 vs. $4.96 S&P Capital IQ Consensus; sees FY20 revs of $3.48-3.53 vs. $3.53 bln S&P Capital IQ Consensus.
UBS to name ING’s Ralph Hamers as next CEO
Exclusive: Replacement lined up for Sergio Ermotti at Switzerland’s largest bank
UBS is set to name ING boss Ralph Hamers its next chief executive, replacing Sergio Ermotti at Switzerland’s largest bank, according to people familiar with the decision.
Mr Hamers will take over from Mr Ermotti, who has spent more than eight years turning round the Swiss lender after it was bailed out during the financial crisis. The 59-year-old won plaudits for reviving earnings, cleaning up the balance sheet and growing UBS into the world’s largest wealth manager with $2.5tn in assets.
ING was forced to pull an additional tier 1 (AT1) bond deal on Wednesday, cryptically saying “information has come to the issuer, that needs to be studied”. The Dutch bank’s shares fell 4 per cent after the unexplained decision, which was made after Mr Hamers notified his board he was leaving the lender.
Mr Hamers, who joined ING more than 28 years ago, has been chief executive of the Dutch lender since 2013. He led the bank through the completion of its post-financial crisis restructuring, repaying the money it received from the Dutch government and returning to dividend payments, while investing heavily in digital services and slashing the size of its traditional branch network.
However, his tenure has more recently been marred by a series of major compliance failings. The bank received a record €775m penalty from Dutch prosecutors in 2018, and has been banned from taking on new customers in Italy for more than a year.
UBS chairman Axel Weber approached Mr Hamers months ago after it was decided Mr Ermotti’s tenure would not be extended, the people said. Following an internal and external search, Mr Weber offered him the job after concluding that he was the most capable and experienced candidate.
UBS and ING declined to comment.
Tesla has revealed additional details about Gigafactory Berlin on a new landing page for the factory, including some details about sustainability as it runs to some delays over environmental issues.
Last year, CEO Elon Musk confirmed that Tesla would build Gigafactory 4 in the “Berlin area”. which will make it ‘Gigafactory Berlin’.
On a new landing page for the factory, Tesla describes the project as “the next phase of Tesla’s presence in Europe”:
“Gigafactory Berlin-Brandenburg is the next phase of Tesla’s presence in Europe. We already operate an assembly facility for Model S and Model X in Tilburg, the Netherlands. In addition, Tesla Grohmann Automation in Prüm, Germany, specializes in automation of our production processes. In total, we currently already employ around 5,500 people in Europe.”
The project will sit on a 300-hectare plot of land next to the GVZ Berlin-Ost Freienbrink industrial park, which Tesla bought for €40 million.
Musk said that Tesla will build “batteries, powertrains, and vehicles, starting with Model Y” at Gigafactory Berlin in Germany.
On the new webpage, Tesla confirmed the early focus on Model Y for phase 1 of the plant with a target of 10,000 vehicles per week:
“Located at a 300-hectare site in the municipality of Grünheide, construction of Gigafactory Berlin-Brandenburg is expected to begin in 2020 with production targeted for 2021. Phase 1 will focus on production of Model Y, with a target capacity of 10,000 vehicles per week. We estimate that during Phase 1, we will employ up to 12,000 people, with roles being filled by local residents and employees from wider Europe. We want the best talent collaborating and working together to achieve the mission.”
As we previously reported, Tesla is going to have to cut down a large number of trees in order to make some space for the factory.
Even though Tesla committed to planting three times as many trees as it is going to cut down, it is a controversial process due to the complex nature of the ecosystem.
There were some protests over the deforestation, but Tesla appeared to calm the tension and managed to start cutting trees last week.
However, the court ordered them to stop last weekend after a petition was raised against the deforestation process.
On a new landing page for the factory, Tesla explains its plan for sustainability related to the factory:
“We are committed to improving the natural environment near the factory and in the wider state of Brandenburg. We aim to replant an area three times the factory plot, with mixed trees native to their habitat and the potential to become an old growth forest, while working with environmental and other expert groups for the best possible outcome. We are also working to ensure plenty of clean drinking water through water-saving measures in the factory as well as a structural solution with and for the community in the medium term.”
The automaker also confirmed that the factory is going to have a “solar roof” and they plan to use as much renewable energy as possible.
With the installation of a new rail and train station on the site, Tesla plans to make it easy for employees to commute to work by train.
The landing page also serves as a job website for Tesla as it starts to post a lot more positions for the factory.
Tesla has previously guided the start of production at Gigafactory Berlin in July of next year.