>>> US Gapping up

Gapping up

Stocks gapping up as markets stabilize and attemp to bounce after a tumultuous week:

  • Technology stocks gapping up XLK +2.3%, QQQ +2.2%: NFLX +4.25% AMZN +3.76% NVDA +3.63% BABA +3.31%
  • Cyclical stocks: Semis SMH +3.2%, Communication XLC +3%: Industrials XLI +2.2%, Health Care XLV +1.7%, Financials +1.7%, DJIA DIA +1.6%, S&P 500 SPY +1.6%

In reaction to strong earnings/guidance:

  • C +2% on modest EPS despite slight rev miss; JPM +1.5% on modest EPS upside and in-line revenue

M&A news:

  • CORI +49.9% (enters into definitive agreement with Gurnet Point Capital, which will acquire all outstanding shares for $12.50/share in cash),

Other news:

  • TTPH +13% (announces US commercial launch of XERAVA for treatment of complicated intra-abdominal infections) ACRX +8% (halted ahead of AdCom Meeting), 

Analyst comments:

  • MSFT +% (upgraded to Outperform at Macquarie), NFLX (Citi upgraded to buy ahead of earnings next Tuesday)

>>> PMorgan Chase Additional Information; Shares up 1% in reaction to earnings;

PMorgan Chase Additional Information; Shares up 1% in reaction to earnings; RoE slightly better than expected, Loan Growth at low end of expectations; Reaffirms FY18 NII and Loan Growth outlook
  • Average core loans ex-CIB up 6% YoY and 2% QoQ; JPM had guided for loan growth near the hiogh end of the 6-7% range at the Barclays conference
  • Expenses were $15.3 bln
  • Credit Costs $900 mln
  • RoE- 14% compared to 14% in Q2 and 11% in prior year; Stated that they expected it to slip toward 13% at Barclays conference last month.
  • RoTCE- 17% compared to 17% in Q2 and 13% in prior year
  • Net Interest Rate Yield rises 5 bps to 2.51%, slightly better than expected
    • Interest Rate Spread 2.24%, up 2 bps q/q.
  • Tangible Book Value per Share $55.68
  • Credit card sales up 12% YoY; merchant processing volume up 14% YoY; reserve build of $150mm this quarter vs. a $300mm build in 3Q17
  • IB revenue of $1.7B, flat YoY
    • Markets revenue of $4.4B, down 2% YoY, or up 1% YoY excluding the impact of tax reform, slightly better than $4.38 bln expectations
    • Fixed Income Markets revenue of $2.8B, down 10% YoY, or down 6% YoY excluding the impact of tax reform; Expectations were for approx $2.96 bln
    • Equity Markets revenue of $1.6B, up 17% YoY, with higher revenue across products, reflecting strong client activity; Expectations were for approx $1.42 bln.
  • Commercial Banking
    • Average loan balances of $207B, up 4% YoY and 1% QoQ
    • C&I up 4% YoY and flat QoQ
    • CRE up 3% YoY and up 1% QoQ
    • Average client deposits of $168B, down 5% YoY
  • Outlook
    • Reaffirmed FY2018 net interest income to be $55.5B+/-, market dependent;
    • Expect FY2018 noninterest revenue growth of 7-8%, market dependent
    • Reaffirmed FY2018 adjusted expense of $63.5B+/-
    • Expect FY2018 effective income tax rate to be ~20%
    • Reaffirmed FY2018 average core loan growth of 6-7%, excluding CIB loans

FT : Patisserie Valerie says finance director arrested

Patisserie Valerie says finance director arrested
Owner of café chain disclosed accounting irregularities earlier this week

Patisserie Holdings, owner of the Patisserie Valerie coffee shop chain, has said in a statement to the markets that its finance director was arrested on Thursday night.

Chris Marsh was suspended from his post on Wednesday. Patisserie Holdings, which operates a chain of more than 200 cafés across the UK, said Mr Marsh had been released on bail.

Patisserie Holdings had disclosed earlier this week the discovery of significant accounting irregularities at the Aim-traded company.

“Further updates will be released in due course,” Patisserie Holdings said on Friday. Mr Marsh could not immediately be reached for comment.

A spokesperson for Hertfordshire Constabulary said that a 44-year-old man from St Albans had been arrested on suspicion of fraud by false representation and released under investigation, without charge.

In a statement, the spokesperson added: “We are not in a position to confirm names at this time. The investigation is being led by the Serious Fraud Office so please direct any further inquiries to them.”

Entrepreneur Luke Johnson, who is executive chairman and a major shareholder, is working with advisers to save the company after it revealed on Thursday that there was a material difference between its stated financial position and its actual condition.

“Without an immediate injection of capital, the directors are of the view that [there] is no scope for the business to continue trading in its current form,” its board said on Thursday.

The group is also facing a winding-up order from the tax authorities. PwC, the professional services firm, is standing by to act as administrator if fresh funding cannot be found in time.