>>> US After Hours Summary: JWN +7.6%, CRMT +6.2%, AMAT -4.2%, NVDA -3


After Hours Summary: JWN +7.6%, CRMT +6.2%, AMAT -4.2%, NVDA -3.6% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ARAY +10.6%, JWN +7.6%, CRMT +6.2%

Companies trading higher in after hours in reaction to news: ZN +13.8% (confirms active petroleum system in Megiddo-Jezreel well in Israel), ATRS +4.8% (continued strength after confirming FDA approval of generic EpiPen utilizing VIBEX auto injector), JCP +2.8% (rebounding from 27% decline following earnings), KSS +1.3% (JWN sympathy), ATAI +0.4% (to acquire Beijing Biztour International Travel Service for RMB50.0 mln; Board declared special cash dividend and reported earnings)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: VNET -5.3%, ATGE -5% (light volume), AMAT -4.2%, NVDA -3.6%

Companies trading lower in after hours in reaction to news: AMRS -6% (launches approx 7.4 mln share secondary offering by certain selling stockholders), ZOES -4.2% (postpones Q2 release / call to tomorrow), ZYNE -4.1% (still checking), VCEL -1.7% (files for $200 mln mixed securities shelf offering)

Semi names are lower on the heels of NVDA / AMAT earnings/downside guidance (ETFs: SMH -0.8%, SOXX -0.6%): LRCX -1.7%, MU -1.5%, SWKS -0.4%, NXPI -0.3%

>>> US Close Dow +1,58% S&P +0,79% Nasdaq +0,42% Russell +0,90%

Closing Market Summary: Wall Street Rebounds As U.S.-China Trade Talks Resume

Stocks rallied on Thursday, helped by news that China and the U.S. will resume trade talks as early as next week, marking the first official talks since negotiations broke down two months ago. The S&P 500 opened higher and extended gains into the afternoon, but some late selling in tech shares left the index +0.8% -- down from +1.2% at its session high.

Meanwhile, the Dow added 1.6%, helped by a 9.3% spike in Walmart (WMT 98.64, +8.42), which rallied after reporting a blow-out quarter and upbeat guidance for FY19. Cisco Systems (CSCO 45.16, +1.30) also helped the Dow, jumping 3.0% on upbeat earnings, and trade-sensitive Boeing (BA 345.98, +14.22) was also a positive influence, adding 4.3% amid the easing of U.S.-China trade tensions.

The tech-heavy Nasdaq Composite underperformed, but still finished with a gain of 0.4%. The index was hurt by losses from several mega-cap tech names, including Facebook (FB 174.70, -4.83), which tumbled 2.7%. Chipmakers also held the Nasdaq back, with the Philadelphia Semiconductor Index closing lower by 0.1%.

As for the S&P 500 sectors, the top-weighted information technology sector finished at the bottom of the sector standings, but still closed in the green, adding 0.3%. Thursday's top-performing sectors were financials (+1.3%), industrials (+1.2%), consumer staples (+1.5%), utilities (+1.1%), and telecom services (+2.0%).

Within the consumer discretionary space, struggling retailer J.C. Penney (JCP 1.76, -0.65) tumbled to another record low, plunging 27.0%, after its Q2 earnings report showed lower-than-expected earnings and revenues. The company also issued disappointing guidance for the fiscal year.

Looking at other markets, U.S. Treasuries sold off, pushing yields higher across the curve, with the benchmark 10-yr yield rising two basis points to 2.87%. Meanwhile, WTI crude futures advance 0.6% to $65.44/bbl, and the CBOE Volatility Index dropped 7.1% to 13.60 after touching a six-week high on Wednesday.

In Washington, Treasury Secretary Steven Mnuchin revealed that the U.S. is preparing additional sanctions against Turkey, where American pastor Andrew Brunson is being detained for allegedly supporting a coup attempt in 2016. The Turkish lira was up as much as 4.8% against the dollar, but cut that gain to 1.5% by the closing bell.

Reviewing Thursday's economic data, which included July Housing Starts and Building Permits, weekly Initial Claims, and the Philadelphia Fed Index for August:

  • Housing starts rose to a seasonally adjusted annualized rate of 1.168 million units in July (consensus 1.256 million), up from a revised 1.158 million units in June (from 1.173 million). Building permits rose to a seasonally adjusted 1.311 million in July (consensus 1.316 million) from a revised 1.292 million in June (from 1.273 million).
    • The key takeaway from the report is the recognition that single-family starts rose just 0.9% to 862,000, which is a modest pace that likely reflects the headwinds builders are facing with higher costs for materials, labor, and land.
  • The latest weekly initial jobless claims count totaled 212,000, while the Briefing.com consensus expected a reading of 217,000. Today's tally was below the revised prior week count of 214,000 (from 213,000). As for continuing claims, they declined to 1.721 million from a revised count of 1.760 million (from 1.755 million).
    • The key takeaway from the report is that low initial claims activity is consistent with a tight labor market.
  • The Philadelphia Fed Survey for August slid to 11.9 (Briefing.com consensus 23.0) from an unrevised 25.7 in July.
    • The key takeaway from the report is that there was an uptick in the diffusion index for future general activity following four straight declines, as more than half 50% of firms expect increases in activity over the next six months.

On Friday, investors will receive July Leading Indicators and the preliminary reading of the University of Michigan Consumer Sentiment Index for August.

  • Nasdaq Composite +13.1% YTD
  • Russell 2000 +9.8% YTD
  • S&P 500 +6.3% YTD
  • Dow Jones Industrial Average +3.4% YTD

FT : Goldman agreed to support fund with Lars Windhorst ties

Goldman agreed to support fund with Lars Windhorst ties
German financier in spotlight after lawsuit against US investment bank

Goldman Sachs agreed to act as prime broker to a fund linked to Lars Windhorst, the European financier in the spotlight after a whistleblower complaint against the US investment bank.

In a lawsuit filed in the US last week, Christopher Rollins, a managing director and 16-year Goldman veteran, claimed he was fired in 2017 as part of an effort to avoid a compliance scandal stemming from multiple trades connected to a “notorious European businessman”.

The suit referred to Goldman arranging the sale of a “large stake” in a listed company on behalf of the unnamed financier in July 2016. That month Mr Windhorst’s investment firm, Sapinda, sold a more than €400m stake in Austrian property group Buwog through the US bank.

Mr Rollins was fired from Goldman after several trades linked to Mr Windhorst failed to settle in August 2016, leaving the bank facing an $85m exposure. But the former Goldman banker alleges in his suit that other senior executives had previously steered a series of transactions related to the financier past the bank’s risk controls.

Documents seen by the Financial Times show that, a year before Mr Rollins’s disputed trades, Goldman signed on as a prime broker to a new fund that a firm that Mr Windhorst was a client of was trying to launch.

Prime brokers offer securities lending, cash management, trading and other services to hedge funds.

London-based Shard Capital Partners LLP was in 2015 looking to raise money for a new series of Luxembourg funds called Shard Capital Funds. While the efforts were ultimately unsuccessful, company filings in Luxembourg show that the US investment bank agreed to act as prime broker to these funds in September 2015. Marketing documents for Shard Capital Funds seen by the FT also refer to Goldman as its “London prime broker”.

Mr Windhorst denies he was the businessman referenced in the complaint from Mr Rollins. An exhibit to the suit is a letter from Mr Rollins to Goldman executives, referring to a 2015 article in the Financial Times profiling the German financier.

A well-known entrepreneur in his native Germany, Mr Windhorst suffered a personal bankruptcy, oversaw several company insolvencies and received a suspended jail sentence in 2009 but then reformed his businesses around holding company Sapinda.

Shard Capital has provided services to several businesses linked to Sapinda group. Deloitte last year claimed that Shard Capital Partners supplied confirmation letters that included “deliberately false” information in its role as custodian to Sapinda Invest, a special purpose vehicle created to invest in Mr Windhorst’s portfolio companies. Shard Capital last year “categorically” denied the audit firm’s allegations, saying they gave answers to Deloitte in good faith and believed them to be true.

When Goldman signed on as prime broker to Shard Capital Partners, Mr Windhorst was in talks to seed the new Luxembourg funds, according to people with knowledge of the matter. The fund’s annual report published in August 2015 said that “a seed investor is standing by with $30 million in specie seed capital”, although it did not specify who this investor was.

However, its next annual report from September 2016 said that by the time the fund was ready to launch “alas, our original seed investor had moved on”.

The statement added that the seed investor might still invest “through one of his portfolios” to launch a “Special Opportunities Fund”. The marketing documents seen by the FT said this Special Opportunities Fund would invest in “high yield illiquid bonds and stocks that are usually asset or story backed”.

A spokesman for Shard Capital said it does not comment on “speculation regarding clients or investors”. A spokesman for Mr Windhorst said he was not the seed investor referred to in the annual reports, nor was he involved in the launch of a Special Opportunities Fund. Goldman Sachs declined to comment.

Shard Capital also helped carry out several sale and repurchase agreements of illiquid bonds on behalf of Mr Windhorst and his Sapinda group, according to multiple traders and fund managers. The German financier has had to fend off lawsuits in recent years due to his failure to settle several such agreements to repurchase bonds.

A spokesman for Shard Capital said the firm “at no time provides input on its custodial clients’ investment or trading strategies”.