Gapping down
In reaction to disappointing earnings/guidance:
- LEDS -26%, (note - was up more than 70% prior trading day), SJR -1%
Other news:
- LPCN -52.6% (FDA panel voted against approval of Lipocine's Tlando 6-13)
- NHLD -15.1% (after today's 65% move higher)
- KODK -8.4% (pulling back in pre-mkt following recent strength)
- FTAI -6.5% (commences 7 mln common stock offering)
- HMNY -5.8% (following CEO Mitch Lowe appearance on Bloomberg TV)
- XL -2.6% (light volume; estimates natural catastrophe net losses of approx $45 million related to the recent wildfires in California and $20 million related to other events; reaffirms previously disclosed aggregate net losses related to Q3 catastrophes)
- NVAX -1.4% (after closing near highs -- up 60% on the day)
- ICHR -1.2% (continued weakness)
- ORC -1% (reduces monthly dividend to $0.11/share from $0.14/share; estimates qtrly GAAP net loss of $0.12 per share including $0.58 per share of realized and unrealized losses on RMBS/derivative instruments), .
Analyst comments:
- BCS -2.4% (downgraded to Underperform from Mkt Perform at Keefe Bruyette)
- JBHT -1.4% (downgraded to Neutral from Overweight at JP Morgan)
- CTXS -1.3% (downgraded to Market Perform from Outperform at Cowen)
- TSCO -1.2% (downgraded to Neutral from Outperform at Wedbush )
- PBF -1.1% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
- RDC -0.8% (downgraded to Neutral from Overweight at Piper Jaffray)
- KMI -0.8% (downgraded to Market Perform from Outperform at Wells Fargo)
Gapping up
In reaction to strong earnings/guidance:
- RELL +21.9%, PRGS +8.8%, FCEL +8.1%, DAL +3.7%, KBH +3.4%, EMMS +2.6%
Other news:
- SECO +37.4% (mention of blockchain; Company is a similar business model to EBAY and is based in China)
- MEIP +13.8% (MEI Pharma and Helsinn Group receive Orphan Drug Designation for Pracinostat from the European Medicines Agency)
- ARDM +12.3% (Aradigm lower with LPCN and ahead of its own meeting with the FDA Antimicrobial Drugs Advisory Committee)
- DPW +7.4% (after closing up nearly 40% on the day)
- FNJN +6.4% ( ticking higher after Federal Circuit affirms Finjan's patents)
- TANH +4.9% (Tantech to acquire shares of Shanghai Shicai subsidiary Lishui Xincai for RMB120 mln)
- MFIN +2.6% (continued strength)
- AMD +1% (Advanced Micro and JD.com collaborate to expand availability of AMD Ryzen desktop processors in China)
Analyst comments:
- EXPE +3.4% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
- Z +3.3% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
- RH +2.8% (upgraded to Buy from Hold at Loop Capital)
- RCL +1% (upgraded to Buy from Hold at Berenberg)
- NFLX +0.8% (initiated with a Overweight at Barclays)
German Chancellor Merkel could step down early during her 4th term - financial press
Looming Disney takeover casts pall over 21st Century Fox
Makers of edgy, award-winning films and TV shows fear for future under cost-cutting new owner
If the results of this week’s Golden Globe awards are a guide, then 21st Century Fox is on a creative hot streak.
The media company’s Hollywood studio won several awards for Martin McDonagh’s acclaimed film Three Billboards Outside Ebbing, Missouri, including best actress for Frances McDormand. Guillermo del Toro won best director for The Shape of Water which, like Three Billboards, was produced by Fox’s Searchlight label. The winning run extended to television, where Ewan McGregor won best actor in a mini-series for his work in Fargo, which is produced by Fox’s FX channel.
In all, Fox productions won seven Golden Globes on a night that is likely to be a welcome distraction from the unease that has settled over the company since Rupert Murdoch announced the $66bn sale of Fox’s entertainment assets to Walt Disney last month.
Disney expects the deal, which could take up to 18 months to be cleared by regulators, to generate $2bn of savings. While a large chunk of this sum is expected to come from the elimination of duplicative back-office functions, there are fears at Fox that the creative executives responsible for identifying the best material and talent could also be in the line of fire.
Some of these executives will go to Disney, making the switch from the Fox studio lot in Los Angeles’ Century City to Disney’s headquarters in Burbank. But others are likely to be less fortunate. Like Fox, Disney owns a film and television studio and employs people in marketing, content distribution and finance. It will not need to operate two parallel organisations that do the same thing and not everyone will be welcomed by the new owner.
The unease at Fox extends to the big differences in how the two companies approach film and television production. One of Bob Iger’s early moves at Disney in his 12 years as chief executive was to cut the number of films it produced, reorienting its output around family movies. He focused on core brands, such as Pixar, and added Marvel superhero films and a new generation of Star Wars movies from Lucasfilm.
Each of the three brands — alongside Disney’s revitalised animation division, which has scored in recent years with hits such as Frozen — have large, ready-made audiences. The result has been a series of years when Disney has led its peers and broken box-office records.
How will Fox’s movie output and edgy, adult-centred films fit into this template? Its studio makes franchises such as the X-Men series, which is based on Marvel characters and which would fit well with the interconnecting films that make up Disney’s Marvel superhero “universe”. The new Avatar films that James Cameron is producing for Fox will also appeal to Disney: the company is already producing attractions based on the movies for its theme parks. But Fox’s other, more adult-focused output would not initially appear to lend itself to the Disney model.
A solution may lie in the streaming services that Disney is working towards launching. Netflix is now making dozens of movies a year such as Bright, starring Will Smith, which it released through its global streaming service rather than in movie theatres. Given that Disney plans to launch its own streaming service in 2019, it will need original movies and television series to drive interest and subscriptions. Movies produced by Fox would ensure greater diversity in the content Disney can offer.
Hollywood is already buzzing about which Fox executives will make the switch to Disney when the takeover is complete. Dana Walden, chief executive of the Fox Television Group, is apparently being eyed by Disney: she is known at Fox as “the Ryan whisperer” for her close relationship with Ryan Murphy, the prolific producer behind hit Fox shows such as The People v OJ Simpson and Glee. John Landgraf, chief executive of Fox’s FX Networks, is another candidate to shift over, as is Peter Rice, the president of 21st Century Fox and a longtime Murdoch lieutenant.
Ultimately, Mr Iger and his Disney colleagues running the integration of the two companies will decide. Two companies will become one, money will be saved and egos will be dented.
Until then, it must be business as usual for Fox’s movie and television studio. Success at the Globes is unlikely to do much for employees anxious about integration with Disney. As regulators begin to scrutinise the proposed deal, they are in for a long wait.
Early premarket gappers
Gapping up:
- RELL +20.5%, MEIP +18.3%, ARDM +12.3%, FCEL +10.3%, PRGS +9.2%, FNJN +8.6%, DPW +7.8%, Z +3.3%, KBH +3.3%, EXPE +3%, DAL +2.9%, MFIN +2.6%, EMMS +2.6%, NVAX +1.9%, GBT +1.2%, IGT +1%, AMD +0.9%, CERN +0.8%, NFLX +0.7%
Gapping down:
- LPCN -53.8%, LEDS -27.5%, NHLD -11.3%, KODK -8.9%, HMNY -8%, FTAI -7%, ORC -5.1%, XL -2.6%, ICHR -1.2%, SJR -0.7%
5% prmium vs yest close
Canada increasingly convinced Trump will pull out of NAFTA
LONDON, Ontario (Reuters) - Canada is increasingly convinced that President Donald Trump will soon announce the United States intends to pull out of NAFTA, two government sources said on Wednesday, sending the Canadian and Mexican currencies lower and hurting stocks.
The comments cast further doubt on prospects for talks to modernize the trilateral North American Free Trade Agreement (NAFTA), which Trump has repeatedly threatened to abandon unless major changes are made.
Officials are due to hold a sixth and penultimate round of negotiations in Montreal from Jan. 23-28 as time runs out to bridge major differences.
It is not certain the United States would quit NAFTA even if Trump gave the required six months’ notice, since he is not obliged to act once the deadline runs out. Notice of withdrawal could also raise opposition in Congress.
One of the Canadian government sources also said later it was not certain that Trump would move against the treaty and that Ottawa was prepared for many scenarios.
But even the prospect of potential damage to the three nations’ integrated economies sparked market concerns.
Wall Street’s major stock indexes ended lower on Wednesday, partly due to those worries. [.N]
The Canadian dollar weakened to its lowest this year against the greenback on Wednesday as the NAFTA concerns tempered bets that the Bank of Canada will raise interest rates next week.
Mike Archibald, associate portfolio manager at AGF Investments in Toronto, cited “a tremendous amount of uncertainty on the horizon”.
Canadian government bond prices rose across the yield curve and railway, pipeline and other trade-sensitive stocks weighed on the country’s main index.
Mexico’s currency also weakened and stocks extended losses. The S&P/BM IPC stock index fell about 1.8 percent.
“There’s been chatter in the market going into this week that it was coming up,” Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
Royal Bank of Canada’s Chief Executive Dave McKay said on Tuesday he believed there was now a greater chance that NAFTA could be scrapped.
“The government is increasingly sure about this ... it is now planning for Trump to announce a withdrawal,” one of the sources, who asked to remain anonymous because of the sensitivity of the situation, said.
Separately, a U.S. source close to the White House quoted Trump as saying “I want out” as the talks drag on with little sign of progress.
A White House spokesman said “there has been no change in the president’s position on NAFTA”.
ALARMED
Trump has long called the 1994 treaty a bad deal that hurts American workers. His negotiating team has set proposals that have alarmed their Canadian and Mexican counterparts.
Among the most divisive are plans to establish rules of origin for NAFTA goods that would set minimum levels of U.S. content for autos, a sunset clause that would terminate the trade deal if it is not renegotiated every five years, and ending the so-called Chapter 19 dispute mechanism.
The head of the U.S. Chamber of Commerce said that economic gains made through tax cuts and the lifting of business regulations would be undone if the U.S. canceled trade deals, including NAFTA.
General Motors Co shares fell 2.4 percent. The Detroit automaker has 14 manufacturing facilities in Mexico, including one that builds large pickup trucks, among the automaker’s most profitable vehicles. Trucks built there could be subject to a 25 percent tariff if the U.S. exits NAFTA.
”We have always said that this is a possibility,” a Mexican government source with knowledge of the talks told Reuters, referring to the prospect of a U.S. withdrawal.
Mexico’s Economy Ministry declined to comment on the report, a ministry spokesman said.
Scott Minerd, Global Chief Investment Officer at Guggenheim Partners, said “if Trump were to announce a NAFTA exit, the stock market would probably pull back by 5 percent or so before advancing to new highs. Most likely the Canadians are reacting to the President’s negotiating posture.”
The Canadian sources said that if Trump did announce the United States was pulling out, Canada would stay at the table, since the talks would continue at a lower level. Mexico has previously said it would walk away if Trump formally announced Washington intended to quit.
Canadian officials say if Trump does announce a U.S. withdrawal, it could be a negotiating tactic designed to win concessions. The talks are scheduled to wrap up by the end of March.
The news broke as the cabinet of Prime Minister Justin Trudeau began gathering in the southwestern Ontario town of London ahead of a scheduled two-day meeting where NAFTA is one of the items on the agenda.
A spokesman for Canadian Foreign Minister Chrystia Freeland - in overall charge of U.S.-Canada relations and the NAFTA file - was not immediately available for comment.
Separately, Canada launched a wide-ranging trade complaint against the United States, the World Trade Organization said on Wednesday, in a dispute that Washington said would damage Canada’s own interests and play into China’s hands.
Additional reporting by Steve Holland in Washington, Joe White in Detroit, Caroline Valetkevitch and Jennifer Ablan in New York, Fergal Smith and Alastair Sharp in Toronto and Ana Isabel Martinez and Dave Graham in Mexico City; Editing by Susan Thomas