>>> Sonangol refutes reported plan to sell Galp Energia indirect stake - report

Sonangol refutes reported plan to sell Galp Energia indirect stake - report (translated)
24 AUG 2018
Sonangol, the Angolan state oil group, has no plans to sell its indirect stake in Galp Energia [ELI:GALP], the energy group, reported Expresso. Portuguese media had reported earlier this month that Sonangol was preparing to divest its 15% stake in Galp worth around EUR 2.2bn. A source on the Angolan state firm’s board, however, told the paper that the reports were mistaken.
Sonangol will keep its indirect Galp holding and also maintain its one-fifth stake in BCP [ELI:BCP], Portugal’s largest commercial bank with a EUR 3.7bn market capitalisation, the same source sa

>>> US After Hours Summary: SPLK / ADSK +7%, GPS -6%, ROST -5%, GLOB -


After Hours Summary: SPLK / ADSK +7%, GPS -6%, ROST -5%, GLOB -4%, HPQ / VMW / INTU -3% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SPLK +7.4%, ADSK +7.3%, OPRA +6.7%, JE +3.6% (provides MifQ Update following 'unwarranted pressure'; expects base EBITDA guidance of $200-220 mln; committed to returning capital to shareholders through dividend distributions), NWY +3.1%, OSIS +2.2% (ticking higher)

Companies trading higher in after hours in reaction to news: ICHR +7.9% (will replace Super Micro Computer [SMCI] in the S&P SmallCap 600), ANET +3.5% (will replace GGP in the S&P 500), AMD +1.7% (continued momentum after making new 52 week highs today), NEWA +1.3% (says 'is not aware of the reasons for the recent volatility in its stock price)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: GPS -6.4%, ROST -5%, GLOB -4.2%, HPQ -3.4%, VMW -3.4%, INTU -2.6% (also announces CEO and President stepping down), IMMU -2.2% (also discloses CFO Michael Garone resigned effective August 23), VEEV -1.1%

Companies trading lower in after hours in reaction to news: MSFT -0.4% (lower on WSJ report of Hungary sales investigation by DOJ/SEC)

>>> US Close Dow -0.30% S&P -0.17% Nasdaq -0.16% Russell -0.32%


Closing Market Summary: Another Dip Ahead of Jackson Hole

Stocks dipped for the second day in a row on Thursday in another range-bound day of trading on Wall Street. The benchmark S&P 500 index inched away from its elusive January 26 record close, ending the session lower by 0.2%, and the Nasdaq Composite and the Dow Jones Industrial Average lost 0.1% and 0.3%, respectively.

There's been a cautious tone in the market over the last two trading sessions as investors digest the political implications for President Trump after his former campaign manager, Paul Manafort, was convicted of tax and bank fraud and after his longtime lawyer, Michael Cohen, pleaded guilty to a range of charges, implicating Mr. Trump directly.

Meanwhile, two days worth of U.S.-China trade negations have been happening in the background. The two nations enacted a new round of tariffs on $16 billion worth of each others' goods overnight, giving investors little hope that anything material will result from this round of talks, which are scheduled to wrap up Thursday.

In addition, a Friday speech from Fed Chairman Jerome Powell at the annual Jackson Hole Symposium has given investors yet another reason to pause just a stone's throw from record territory. Mr. Powell, who has maintained a relatively low profile since taking office in early February, will take the podium at 10:00 AM ET.

10 of 11 sectors finished Thursday in negative territory, but, thankfully for the bulls, the top-weighted technology group was the lone exception. The tech space, which represents roughly a quarter of the broader market, advanced 0.2%. Within the group, chipmaker Advanced Micro (AMD 22.29, +1.39) jumped 6.7%, hitting a 12-year high, after Rosenblatt raised its target to $30 from $27.

As for the laggards, losses were pretty modest overall, with most groups shedding less than 0.5%. The financials (-0.5%), energy (-0.5%), and lightly-weighted materials (-0.7%) groups were the worst performers. However, the energy space is still up 1.8% for the week, a rebound it desperately needed after taking a 3.6% hit last week.

In earnings news, L Brands (LB 28.25, -3.64) tumbled 11.4%, hitting a seven-year low, after lower-than-expected guidance overshadowed above-consensus Q2 results. Conversely, Williams-Sonoma (WSM 72.94, +10.33) spiked 16.5% to a nearly three-year high after beating both top and bottom line estimates.

Looking at other markets, U.S. Treasuries finished flat, with the benchmark 10-yr yield closing unchanged at 2.82%. WTI crude futures also closed flat, settling at $67.84/bbl, after rallying 3.1% on Wednesday, and the U.S. Dollar Index jumped 0.6% to 95.55, putting a five-session losing streak to rest.

Reviewing Thursday's economic data, which included July New Home Sales, weekly Initial Claims, and the FHFA Housing Price Index for June:

  • New Home Sales in July hit an annualized rate of 627,000, which is below the consensus of 645,000. The June reading was revised to 638,000 (from 631,000).
    • The key takeaway from the report is that the average and median selling prices increased despite the slower sales pace observed in July.
  • The latest weekly initial jobless claims count totaled 210,000, while the consensus expected a reading of 217,000. Today's tally was below the unrevised prior week count of 212,000. As for continuing claims, they declined to 1.727 million from a revised count of 1.729 million (from 1.721 million).
    • The key takeaway from the report is that low initial claims activity remains consistent with a tight labor market.
  • The FHFA Housing Price Index rose 0.2% in June, and the May increase was left unrevised at 0.2%.

On Friday, investors will receive just one economic report -- July Durable Goods Orders (consensus -0.6%).

  • Nasdaq Composite +14.1% YTD
  • Russell 2000 +11.8% YTD
  • S&P 500 +6.9% YTD
  • Dow Jones Industrial Average +3.8% YTD

FT : Bayer reports sharp rise in legal cases linked to its weedkiller

Bayer reports sharp rise in legal cases linked to its weedkiller
US court ruled earlier this month that Roundup and Ranger Pro products cause cancer

Bayer said on Thursday that it has seen a large increase in US legal cases linked to its best-selling weedkillers Roundup and Ranger Pro, following a landmark verdict by a California court earlier this month that found the products cause cancer.

The German pharmaceuticals and chemicals group said it was aware of about 8,000 plaintiffs in US state and federal courts, up from 5,200 earlier this year. “The numbers may rise or fall over time but our view is that the numbers are not indicative of the merits of the plaintiffs’ cases,” said Werner Baumann, Bayer chief executive, 

The disclosure came as Bayer’s senior management sought to calm investor fears about the legal risk posed by the recent setback, insisting in a conference call on Thursday that it would “vigorously defend this case” and that there was no sign of an impact on sales. 

Bayer shares have fallen sharply in recent weeks, after a California court awarded $289m in damages to a school groundskeeper with terminal cancer. The jury found that the plaintiff’s illness was a direct cause of his exposure to Roundup and Ranger Pro, two herbicides that include the chemical glyphosate. Both products are made by Monsanto, which Bayer bought earlier this year. 

“Farmers and growers have been using glyphosate safely and effectively for more than 40 years,” Mr Baumann said on Thursday. “The safety of glyphosate has been substantiated by more than 800 scientific studies and reviews . . . which conclude that it can be used safely and does not cause cancer.” 

He added: “The verdict of one jury in one case does not change the scientific facts”. 

Mr Baumann said Bayer would seek to have the verdict overturned, and had no plans to settle with the plaintiffs. 

Wolfgang Nickl, the German group’s chief financial officer, said Bayer had no plans to make new provisions for damages in relation to the glyphosate cases, but was likely to make some provisions for the costs of its legal defence.

Bayer’s shares have swung wildly in recent weeks, falling from €93.6 before the California verdict was announced to a five-year low of €75.5 last week. The stock has recovered some ground since, and was trading at €81.9 on Thursday afternoon, down 2 per cent on the day. 

Some analysts believe the recent market reaction has been overdone, pointing out that jury verdicts in cases such as the one against Bayer are often overturned, or end up with sharply reduced damages. In a research note published ahead of the conference call, analysts at Berenberg estimated the group’s potential liability at $3.8bn.

The note also argued that there would be “minimal” impact on business. “We do not expect a significant reduction in glyphosate use; it remains supported by most major regulatory bodies and has become a critical pesticide in modern farming practice,” Berenberg said. 

Bayer gave much the same assessment on Thursday. “We don’t anticipate any negative impact on sales [of glyphosate products]. Nothing whatsoever has changed in the regulatory standard of the products. There is simply very high demand and has been for many, many decades now,” said Liam Condon, head of Bayer’s Crop Science division. 

FT : Premier Oil keen on North Sea acquisitions

Premier Oil keen on North Sea acquisitions
Chief expects uptick in deal activity in the sector after prolonged downturn

Premier Oil is looking at possible acquisitions in the North Sea as some of the world’s largest energy groups prepare to scale back their presence in the region.

Tony Durrant, chief executive of Premier, said he expected an uptick in deal activity as the industry emerges from a prolonged downturn. Premier, he said, was “on the buyside” and would look for opportunities to expand its presence in the North Sea.

Chevron, the US oil group, in July announced it was selling a large package of assets. France’s Total is also understood to be preparing to sell some fields. While some of the world’s majors have reduced their presence, the region has seen an influx of private equity owners in recent years.

Mr Durrant was speaking after the company announced that profits in the first six months of the year had more than doubled to $98.4m, helped by the higher oil price. Earnings before interest, tax, depreciation and amortisation were 19 per cent higher at $388.9m for the period to the end of June 2018.

Shares in Premier were up 1.15 per cent in late afternoon trading to 122.9p.

The independent UK company has been focusing on reducing net debt since the collapse in oil prices; it reported that this fell from $2.72bn to $2.65bn. Mr Durrant said he believed the company’s banks would “support some increase in leverage” if it found a suitable acquisition.

Premier said group production for the first half was slightly down on the same period last year — it averaged 76,200 barrels of oil equivalent per day — as new production from its flagship North Sea field Catcher and outperformance from a field in Vietnam was offset by asset sales and planned maintenance. The company said it was sticking to its full-year production guidance of between 80,000 and 85,000 boe/d for the full year.

Analysts at RBC Capital Markets said the results “underline Premier is on the cusp of material deleveraging”. 

The company earlier this week sanctioned the Tolmount Main gasfield, one of the largest undeveloped gas discoveries in the southern North Sea. On Thursday, it said “significant upside” exists within the Greater Tolmount Area and that it planned to drill an appraisal well in the eastern area in the middle of next year. 

Mr Durrant said Premier was still in the process of selecting contractors to help it develop a large oilfield in waters north of the Falkland Islands.

The Sea Lion project, which was discovered by Rockhopper, an Aim-quoted company, could be a material opportunity for Premier with about 400m boe (net to Premier) to be developed over several phases. Premier has awarded letters of intent to several contractors. It will now focus on securing senior debt funding for the project in the second half of this year, ahead of taking a final investment decision.

FT : The bitcoin bubble’s real losers

The bitcoin bubble’s real losers
Many bankers sold close to the top, piggybacking on those with fewer market smarts

A once-in-a-lifetime chance has emerged to invest in SchadenfreudeCoin — a decentralised digital token pegged to the smugness of No-Coiners who were never sucked into the ailing cryptocurrency fad.

The highly scalable, next generation, disruptive new coin comes with the backing of social media celebrities and provides the perfect hedge against the declining value of bitcoin. Hand over your bank details now.

It’s a joke, but only just. Those of us accustomed to the daily lorry-load of cryptobabble emails can attest that it is scarily close to the real world of PR foisting untested and unregulated financial products on to naive investors. And given the levels of crowing from the crypto holdouts, a SchadenfreudeCoin could even be quite lucrative.

The stream of asinine crypto promotions is waning, however. It will probably soon dry up altogether, given the asset class’s dreadful recent run. From a peak of about $20,000 per coin in December, bitcoin — the biggest of thousands of digital coins around the world — has tanked to around $6,000.

True, anyone who bought before November last year is at least still flat on their investment. Fans still recommend holding (“HODLing” in the market’s parlance), a comparatively easy task given how hard it can be to liquidate positions. Still, the glum tone among the true believers who once castigated holdouts as “Keynesian bag carriers” is clear.

“Sadly, I have to report low conviction today,” one crypto trader laments in an emailed note. “There’s also the issue of tepid fiat-crypto exchange volumes which speaks to low retail demand and a lack of fresh retail capital entering the ecosystem.”

That is a telling comment. The market, even according to its supporters, relies on drawing in new blood. It cannot thrive and has no fundamental driver for further gains without it. “Bust is the word,” said the chief executive of IG Group, one of many retail brokers that happily rode the wave of huge buying volumes towards the end of last year but that now thinks the frenzy has passed.

The last thing crypto buyers sitting on losses need to hear right now is “I told you so”. Only the hardest of hearts can fail to feel sympathy for investors who have lost their savings for college or whose first foray into financial markets has left them ruined. Nonetheless, it’s hard to sympathise with the buyers who disregarded the pleas of (most) regulators, central banks and the bulk of sane financial advisers to steer clear. Particularly tiny violins will squeak for the professional bankers who jumped in.

In April, I was invited to moderate a discussion about the prospects for cryptocurrencies. The panellists broadly, though not universally, agreed that they were limited, but that something may be possible to salvage from the underlying technology.

One asked for a show of hands among the audience, which comprised roughly 120 bankers — sales and trading types — and other financial intermediaries, to determine how many had bought into the craze. At least two-thirds raised their hands, many had sold close to the top, and almost all were still in the black.

Did they believe the hype? That crypto was about to wash away the antiquated fiat money system from which they drew their livelihoods? Unlikely. They just did what they do best and found a greater fool with less information and fewer market smarts, and piggybacked on their flows.

Crypto is limping on, but has proved itself to be more than small enough to fail. The price crash has had zero ramifications for financial markets so far.

Of course, there is one shining city upon a hill that is keeping the faith: Venezuela. President Nicolás Maduro this week launched a new national currency pegged to an oil-based crypto coin. As one observer noted: he may as well have pegged it to unicorns.