Closing Market Summary: Nasdaq Hits New Record Following February Jobs ReportStocks advanced on Friday, climbing steadily over the course of the session, as investors cheered the Employment Situation Report for February, which showed strong jobs growth while keeping inflation concerns at bay. The Nasdaq Composite climbed 1.8% to finish at a new record high (7560.81), its first record finish since before a volatile round of selling at the beginning of February. Meanwhile, the S&P 500 and the Dow Jones Industrial Average advanced 1.7% and 1.8%, respectively.
Nonfarm payrolls increased by 313,000 in February, blowing past the consensus estimate of 210,000, and the January increase was revised upward to 239,000 (from 200,000). Meanwhile, average hourly earnings increased 0.2%, as expected, which brought the year-over-year increase down to 2.6% from 2.8% in January. The unemployment rate stayed at 4.1%, which is slightly higher than the Briefing consensus estimate of 4.0%, but still good enough for a 17-year low, and the average workweek ticked up to 34.5 from a revised 34.4 in January (consensus 34.4).
In short, it was another 'Goldilocks' report, pointing to strong economic growth via the impressive nonfarm payroll additions while at the same time giving the market no reason to believe that the Fed will need to be more aggressive in its path to normalization--evidenced by the deceleration in year-over-year wage growth.
U.S. Treasuries sold off in reaction to the jobs report, pushing yields back towards the multi-year highs they hit a couple of weeks ago; the benchmark 10-yr yield advanced to 2.89% after finishing Thursday at 2.87%. The uptick in yields helped underpin the financial sector (+2.5%), which finished at the top of the sector standings.
Within the financial space, Goldman Sachs (GS 270.77, +4.43) settled behind its peers following reports that its CEO Lloyd Blankfein is preparing to step down after serving at the helm for more than 12 years. Co-presidents Harvey Schwartz and David Solomon are the two front runners to replace Mr. Blankfein.
10 of 11 S&P groups finished Friday in the green, with the lightly-weighted telecom services space (-0.1%) being the lone laggard. In addition to financials, industrials (+2.2%), technology (+2.0%), materials (+1.9%), and energy (+1.9%) outperformed, while the consumer staples (+0.6%), real estate (+0.7%), and utilities (+0.3%) groups were relatively week. The energy space was helped by an increase in the price of crude oil, with West Texas Intermediate crude futures climbing 3.1% to $62.05 per barrel following a two-day skid.
News that President Trump accepted an invitation to meet with North Korean leader Kim Jong Un helped underpin Wall Street on Friday. The meeting, which will reportedly take place by the end of May, would mark the first meeting between a sitting U.S. president and a member of the Kim dynasty.
In addition, investors were still chewing on President Trump's tariff announcement on Friday, which went better than many were expecting. The president officially approved tariffs on steel and aluminum imports shortly before Thursday's closing bell, but gave Canada and Mexico an exemption and said that other countries might also receive an exemption depending on their willingness to renegotiate trade deals with the U.S.
- Nasdaq Composite: +9.5% YTD
- S&P 500: +4.2% YTD
- Dow Jones Industrial Average: +2.5% YTD
- Russell 2000: +4.0% YTD
Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- AUTO -30.7%, INSY -12%, BIG -11.3%, FNSR -11%, NTEC -8.9%, ZTO -8%, (also CFO steps down for personal reasons; announces special dividend of $0.20/ADS), TPIC-6.8%, OTIC -6.4%, BOOM -5.6%, CDXS -4.2%, MRVL -3.7%, GCAP -3.1%, IDT -2.7%,AMWD -2%, YEXT -1.7%, PVG -1.1%, PRTY -1.1%, ATEC -0.9%, PAY -0.8%
Other news:
- VNRX -21.8% (announced proposed underwritten public offering of common stock )
- ORC -7% (announced March dividend of $0.09 per share, prior month $0.11 per share)
- MAT -6.1% (lower on reports that Toys R Us may liquidate operations)
- HAS -3.2% (lower on reports that Toys R Us may liquidate operations)
- GBT -3% (priced offering of 4,000,000 shares of its common stock at a price to the public of $54.00/share)
- OCLR -2.8% (following FNSR results)
- EEX -2.1% (priced offering of 6 mln shares of common stock by investment funds managed by Onex Partners and its affiliates at $18.50 per share)
- DPLO -1.6% (pulling back -- being attributed to block trade pricing)
- TSLA -1.6% (disclosed its Chief Accounting Officer Eric Branderiz left Tesla for personal reasons)
- ETSY -1.3% (Etsy proposes $300 mln convertible senior notes due 2023 offering thru private placement )
- LITE -0.9% (following FNSR results)
Analyst comments:
- ACIA -4% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
Early premarket gappers
Gapping up:
- PDLI +18.9%, ACRX +15.8%, ENT +10.8%, FNKO +10.2%, UNFI +9.6%, SPKE +9.2%,TXMD +8.6%, DTEA +8.2%, LOCO +7.3%, UPLD +5.8%, KMG +5.5%, MYOK +3.4%,PVG +3.3%, WYNN +1.9%, MD +1.6%, PAGS +1.5%, PIRS +1.4%, CORT +1.2%, GNC+1.2%, CRSP +1.2%, QCOM +1.1%, CHRS +1.1%, WEN +1%, REGI +0.9%
Gapping down:
- AUTO -30.7%, VNRX -15%, FNSR -8.7%, BIG -7.5%, ORC -7%, TPIC -6.8%, INSY-6.1%, BOOM -5.6%, GBT -5.1%, ZTO -5.1%, OTIC -4.6%, CDXS -4.2%, FLXN -3.7%,OCLR -3.2%, MAT -3.2%, MRVL -3%, PAY -3%, EEX -2.9%, IDT -2.7%, HAS -1.7%,YEXT -1.7%, GCAP -1.7%, DPLO -1.6%, TSLA -1.5%, ETSY -1.3%, TI -1%, LITE -0.9%,ATEC -0.9%, GM -0.6%
Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- PDLI +21.9%, FNKO +13.2%, CCXI +9.6%, SPKE +9.3%, (also announces two acquisitions and retains Morgan Stanley as financial advisor to explore strategic alternatives), UNFI +8.3%, UPLD +7.6%, LOCO +7.3%, KMG +5.5%, FLXN +3.7%,PAGS +2.4%, CRSP +1.5%, PIRS +1.4%, CHRS +1.1%, REGI +0.9%
M&A news:
- DAN +1% (Dana Inc to combine with the Driveline division of GKN)
Other news:
- ACRX +15.8% (announces receipt of Type A FDA meeting minutes and plans to resubmit the DSUVIA New Drug Application in Q2 2018; reported earnings)
- TXMD +13.4% (announced FDA acceptance of NDA and PDUFA date for TX-001HR of October 28, 2018 )
- DPW +11.6% (DPW Holdings subsidiary Super Crypto Mining to purchase another 1,100 S9 mining machines)
- DTEA +8.2% (DAVIDsTEA co-founder Herschel Segal steps down from Board; he (Rainy Day Investments) decided to begin the process of exploring leading a privatization transaction for DTEA; Board considering options; COO also reigns from Board)
- MYOK +3.4% (announces positive results from low-dose cohort of Phase 2 PIONEER-HCM study of Mavacamten in symptomatic, obstructive hypertrophic cardiomyopathy patients; also reports earnings)
- WYNN +2.5% (Wynn Resorts, Universal Entertainment and Aruze USA reach settlement agreement )
- ENT +1.3% (announced $150 mln investment from Searchlight Capital Partners, appointed Jeff Leddy as Executive Chairman and Josh Marks as CEO)
- GNC +1.2% (GNC Holdings and Guardian Healthcare announced 'major' expansion of presence in India - expected to increase to over 4,000 retail outlets across India by 2020)
- WEN +1.1% (CFO disclosed the purchase of 5K shares)
Analyst comments:
- CORT +4.9% (initiated with a Buy at B. Riley FBR)
- CYBR +2.4% (upgraded to Buy at BofA/Merrill)
- WMB +1.2% (upgraded to Overweight at JP Morgan)
- BURL +0.9% (initiated with a Buy at Loop Capital)
Spotify will prove a lonely pioneer with unconventional IPO
Music streaming company is rare in that it has the finances and brand to avoid traditional IPO
Being public is not as onerous as sometimes claimed. After all, Mark Zuckerberg wishes Facebook had floated earlier. Elon Musk frequently taps public investors for more capital without them losing patience in Tesla. Don’t like the idea of quarterly earnings calls? Neither does Jeff Bezos. He stopped showing up for them nine years ago. Amazon shareholders seem to have coped: the e-commerce company’s market value is now the third highest in the world at $750bn.
What has led to the dearth of initial public offerings is simply the glut of private capital — from sovereign wealth funds and mutual funds anxious not to miss out on the next big thing. At some point that unwinds. Consider Redfin, the online estate agent, which went public last July. “For three or four years there was a unicorn bubble: you could get a higher price for your stock in the private markets,” says Glenn Kelman, chief executive. Then the economics reverted to normal. “Fidelity and other shareholders told us we would get one price in a private placement and a higher price if we sold it in the public market. At that point we knew immediately we’d go public.”
How unpleasant is goingpublic? Certainly, the traditional route can be arduous and expensive. It is good for investment banks such as Goldman Sachs and Morgan Stanley, which typically reap fees worth up to 7 per cent of the IPO proceeds. It is good for well-connected institutional investors, which get to jump the queue and perhaps flip their allocation of stock for a quick and easy profit.
In search of a better way, Spotify is about to shun the traditional IPO with a direct listing which will see the music streaming company land, unceremoniously, on the stock market. Perhaps this is the model for future unicorns — but don’t bet on it. For all its arcane rituals, the traditional IPO has survived repeated attempts to disrupt it before.
“I do think the tech industry will be watching,” says Rick Kline, a lawyer at Goodwin Procter, who has worked on IPOs including Snap, the biggest of last year. But he cautions: “I have not had other companies ask me about it. There are only so many companies that fit into the bucket: large and prominent enough not to want the marketing and well-funded enough not to need the proceeds that an IPO provides.”
Redfin’s Mr Kelman praises the IPO roadshow, gruelling as it can be, as a good discipline. He says a chief executive should be able to explain the company to investors. If the story is not intelligible, perhaps there is something more profoundly wrong.
What about the bankers’ fees? “If the income you resent is investment bankers’ income you’ve got it all wrong,” says Mr Kelman. He is more sceptical of the earnings of “the people who buy stocks, and particularly people at hedge funds who buy stocks”. The lead bankers on the IPO — in Redfin’s case Goldman Sachs — do provide value, Mr Kelman says, “sitting through four months of drafting sessions, putting up with all your craziness”.
In a recent blog post, he mentions other services The price on the day of your IPO isn’t as important as some people thinkfrom Goldman: buying a cake for his chief technology officer’s birthday, for instance, and tolerating Redfin’s decision to avoid private jets. On the other hand, he reckons the supporting cast of bankers has it much easier: “Within the ranks of the people selling the stock, there are people in the syndicate that are fairly comfortable and well paid.” And Goldman is looking for fatter fees down the line from follow-on offerings and mergers and acquisitions advice. “They constantly remind you, ‘we’re not making much money on this one’.”
They are not making much money on Spotify, but they are making some. The irony is that even the alternative route comes with tolls to investment bankers to help prepare the direct listing. So why bother? Of particular appeal to Spotify, according to people familiar with the company’s thinking, was an ability to give earnings guidance to prospective investors and avoid the typical lock-up that delays some existing shareholders from selling stock. This may come at the cost of volatility.
Mr Kelman said he did not consider alternatives to an IPO. For one thing, Redfin wanted to raise capital, so Spotify’s direct listing was not an option. For another, he did not see the point of spending time designing different paths — such as Google’s 2004 Dutch auction. “The price on the day of your IPO isn’t as important as some people think,” he says. Only over the first couple of years will come the real test for Redfin, as for other newly public companies. “It’s going to become very profitable or it won’t — and our stock price is going to rise or fall accordingly.”
BofAML EMEA Indications:
CGG - EBITDA 28% beat but net debt 24% higher than ests. Outlook +ve (1.63)+10%
SIG - Top line & pretax 2% better. C/o sees operational improvement (157).+4-5%
GVC - 1% ahead at top & bottom line. Strong start to '18 with NGR +16% (919)+2%
LADBROKES - Positive; Ladbrokes holders approve scheme for GVC merger (165).+1%
ORANGE - Senti +ve; TF1/Orange announce a global distribution agreement (14)u/c
SPIE - Inline with NI 1% below cons. Guides for margin of 6% or more (21.4).u/c
TF1 - Senti +ve; TF1/Orange announce new global distribution agreement(11.6)u/c
COMMERZBANK - We reinstate coverage with an UNDERPERFORM and EUR 11 PO (12).-1%
WPP - Another -ve data point. RBS to run more advertising internally (1218).-1%
MINERS - Copper -0.66%, Iron Ore fut -3.15% & HP OZ -1.73%, RIO OZ -2.65%.-1-2%
BHP - Shell/Blackstone preparing a $10b bid for BHP's US Shale assets (1376)-2%
FERRAGAMO - EBIT 9% ahead but forward look commentary v lacklustre (21.27)..-2%
INMARSAT - Mixed. Q4 beats but guidance and divi cut will disappoint (444)-2-3%
LAGARDERE - Negative. EBIT 1% & EPS 9% miss and guidance underwhelming (23).-5%
MainFirst Pre Mkt Indications
*FERRAGAMO-FY NI 114m(131),Ebit 186m(179.2),Ebitda 249m(243).....-2%
*LAGARDERE-FY Net 217m(243.6),Ebit 403m(408),NI 179m,FCF 283m....-2%
*SPIE-FY Rev 6.13b(6.15),Adj Net 212.3m(213),Bolt on acq's.......-1%
*UNIPER-Is in dispute with EON over Uniper's proposed Div 74c....U/C
*DEUT POST-KFC strips DHL of some chicken deliveries in the UK...U/C
*SFS-FY Ebita 236m(234),NP 159m(130),Div 1.9(1.82),s/grth 5-7%...+1%
*SCHWEITER-FY Sales 980m(1),Ebit 87m(82),Div 45c(42.33)..........U/C
*WIRECARD-Verifone -2.5% a/hrs Q2 EPS guidance misses Est's .....-0.5%
*COVESTRO-CEO Thomas may leave before contract expires - WIWO....-0.5% *DEL HERO-ABB 1.3m shs from existing s/holders,price 38.3(38.4)..-0.25%
*AROUNDTOWN-Cap raise 95m new shares to finance grth strategy....-2%
CS
Inmarsat +2-3% FY revs $1.4B est $1.39B, EBITDA ahead
Landis&Gyr +1% Concludes debt refinancing
Miners -0.5-1% Copper -0.15%, Brent -0.35%, Iron Ore -2.60%, China +0.40%
Renewi M/P Board remains confident on full year
Schweiter +2% FY17 Sales 2% light, organic sales growth 7% ahead
Siltronic +1% Positive comments from chairman of Macronix International
SFS +1% Margins slightly ahead, guidance inline
Akzo Nobel to make one or two acquisitions yearly (translated)
09 MAR 2018
Dutch paint company Akzo Nobel [AMS:AKZA] is expecting to make one or two acquisitions a year, De Financieele Telegraaf reported. The paper cited CFO Maarten de Vries.
In a short interview with the paper, the CFO said Akzo Nobel is again in a position to start buying companies. De Vries said he is eying several firms that are for sale, but asking prices are still too high. Still, De Vries expects to make several acquisitions. He did not name specific targets.
Last year, US paint company Axalta [NYSE: AXTA] held merger talks with Akzo Nobel but they failed. There is currently no direct or indirect contact between the two companies, the report added, citing Akzo Nobel CEO Thierry Vanlancker.
Link to original source here.