Gapping down
In reaction to disappointing earnings/guidance:
- CBL -19.3%, P -19%, IMGN -18.6%, DATA -16%, PACB -15.9%, AXDX -13.5%, PMT -13.3%, CLNE -11.7%, KEYW -11.6%, HMSY -10%, BVX -9.3%, STMP -8.7%, RUBI -7.5%, LOCO -7.1%, BLMN -6.9%, YRCW -6.7%, HLF -6.2%, RDUS -5.4%, COHU -5.2%, AOSL -4.8%, USCR -4.7%, ATUS -4.1%, AIG -3.8%, RLGY -3.3%, DRNA -3.2%, CARA -3.1%, ACIA -2.7%, HCI -2.7%, PBPB -2.6%, AXON -2.3%, BNFT -2.3%, XPER -2%, GNMK -1.5%, ED -1.5%, LNT -1.2%, CBS -1.1%, NE -1%, HDP -1%, ADMS -1%, TRQ -1%
Other news:
- IMGN -16.2% (ahead of earnings tomorrow before the open)
- BONT -10.4% (announces that the shares of its common stock will begin to trade on the OTCQX Best Market starting Thursday, November 9)
- ACET -2.7% (finds material weakness in the design and effectiveness of its internal control over financial reporting)
- APRI -2.4% (files for $100 mln mixed securities shelf offering)
Analyst comments:
- THS -1.6% (downgraded to Underweight from Neutral at JP Morgan)
- SYNA -1.2% (downgraded to Neutral from Buy at Rosenblatt )
- GIL -0.9% (downgraded to Market Perform from Outperform at BMO Capital)
- HRL -0.6% (initiated with a Underweight at Morgan Stanley)
Gapping up
In reaction to strong earnings/guidance:
- ABUS +22.8%, BOOT +17.3%, EVC +11.6%, FND +11.5%, DPW +11.5%, VRNS +10.2%, WING +8.7%, ANET +8.4%, MELI +8.1%, TNET +8%, UQM +7.9%, CATM +7.3%, MATX +7.1%, EVH +6.4%, (also signs expanded relationship agreement with Premier Health), WIFI +6.3%, MOH +5.2%, ROG +5%, EBS +4.9%, ACLS +4.9%, ACLS +4.9%, LNTH +4%, UNIT +3.7%, AAPL +3.6%, AUTO +3.6%, GNW +3.6%, ATVI +3.4%, CTRL +3.3%, OLED +3.2%, CPST +3%, CRUS +3%, NYMT +3%, CECO +3%, AXL +3%, ERI +2.9%, HTGC +2.8%, TEP +2.7%, FLR +2.7%, KTOS +2.7%, ABY +2.6%, DVAX +2.3%, SNN +2.3%, JOE +2%, MDRX +1.9%, TRUP +1.9%, MTZ +1.9%, GTE +1.8%, AGO +1.8%, BIP +1.8%, EYES +1.7%, SN +1.4%, BIO +1.4%, Y +1.1%, OTEX +1.1%, DRAD +1.1%, LADR +1%, AAV +1%, CBG +1%
M&A news:
- S +5.8% (WSJ reporting that T Mobile and Sprint are attempting to save merger)
- TMUS +2.9% (WSJ reporting that T Mobile and Sprint are attempting to save merger)
- NXPI +0.5% (WSJ report that Elliott Management has hired bankers to find other bidders for NXPI, or force Qualcomm (QCOM) to make a higher bid)
Select AAPL related names showing strength:
- CRUS +3%, SWKS +2.3%, AVGO +1.7%, QCOM +0.7%, TXN +0.7%
Other news:
- DCIX +40% (after 20% move higher today)
- DPW +11.5% (discloses entry into securities purchase agreement)
- HCC +10.6% ( after declaring special cash dividend of $11.21 per share of Warrior's common stock)
- VRX +4.9% (VRX unit announces FDA approval Of VYZULTA)
- VZ +1.1% (S / TMUS sympathy)
- ALXN +1.1% (presents data from clinical trial of Kanuma)
Analyst comments:
- WFT +4% (upgraded to Outperform from Mkt Perform at Bernstein)
- OAS +3% (upgraded to Outperform from In-line at Evercore ISI)
- MAT +2.5% (upgraded to Neutral from Underperform at DA Davidson)
- CTXS +1.7% (upgraded to Buy from Neutral at Goldman)
- BLUE +1.5% (upgraded to Equal-Weight from Underweight at Morgan Stanley)
- TWTR +1.4% (upgraded to Buy from Hold at Argus)
- SFS +0.8% (initiated with a Outperform at Wells Fargo)
- REGN +0.7% (upgraded to Neutral from Underperform at Robert W. Baird)
Early premarket gappersGapping up:
- DCIX +34%, ABUS +19.3%, BOOT +17.3%, FND +12%, EVC +11.6%, VRNS +10.2%, HCC +9.5%, TNET +8%, ANET +7.9%, UQM +7.9%, MELI +7.6%, CATM +7.3%, MATX +7.1%, MOH +6.8%, WING +6.7%, WIFI +6.3%, INTT +6.2%, EVH +6%, VRX +5.8%, S +5.3%, ACLS +5.2%, ACLS +5.2%, ROG +5%, EBS +4.9%, CTRL +4.6%, SPPI +4.4%, KTOS +4.3%, LNTH +4%, AAPL +3.7%, UNIT +3.7%, AUTO +3.6%, GNW +3.6%, NYMT +3%, CECO +3%, CRUS +2.9%, CRUS +2.9%, TEP +2.7%, ABY +2.6%, OLED +2.5%, AVGO +2.1%, SWKS +2%, CPST +2%, MDRX +1.9%, TRUP +1.9%, MTZ +1.9%, GTE +1.8%, ATVI +1.8%, AGO +1.8%, BIP +1.8%, TMUS +1.7%, EYES +1.7%, HTGC +1.6%, BIO +1.4%, FLR +1.2%, Y +1.1%, OTEX +1.1%, DRAD +1.1%, LADR +1%, AAV +1%
Gapping down:
- P -21.7%, CBL -18.6%, PACB -14.4%, AXDX -13.5%, RUBI -13%, DATA -12.6%, CLNE -12.1%, BVX -11.8%, HMSY -10%, STMP -9.6%, LOCO -7.1%, XPER -6.5%, RDUS -5.4%, COHU -5.2%, AOSL -4.8%, IMGN -4.3%, AIG -4.3%, IMGN -4.3%, ATUS -4.1%, HLF -3.9%, PMT -3.9%, CC -3.3%, DRNA -3.2%, YRCW -3.1%, CARA -3.1%, HCI -2.7%, PBPB -2.6%, NE -2.4%, AXON -2.3%, ACIA -2%, USCR -1.9%, BLMN -1.7%, GNMK -1.5%, ED -1.5%, SBUX -1.4%, LNT -1.2%, CBS -1.1%, HDP -1%, ADMS -1%, TRQ -1%
>>> Key takeaways
* Flows this week: $5.0bn into equities, $6.9bn into bonds, $0.2bn into gold
* Bull & Bear pulls back to 7.3 on weaker inflows and breadth
* Goldilocks sustaining Icarus...Q4 vol risks remain payroll/AHE surprise
* Equities: inflows 19 of past 21 weeks ($5.0bn; $9.4bn into ETFs, $4.4bn outflows from mutual funds)
* Bonds: 33 straight weeks of inflows ($6.9bn)
* Precious metals: small week of inflows ($0.2bn)
Fixed Income
* 45 straight weeks of IG bond fund inflows ($7.8bn)
* Small HY bond fund outflows ($0.3bn)
* Inflows to EM debt funds 40 of past 41 weeks ($0.7bn)
* Biggest muni funds outflows in 17 weeks ($0.2bn)
* 7 straight week of govt/Tsy fund outflows ($1.2bn)
* Small inflows into TIPS ($0.2bn)
Equity Flows
* US: small outflows after large recent inflows ($1.2bn)
* Japan: strong inflows after recent redemptions ($3.4bn)
* Europe: first outflows in 9 weeks ($0.5bn)
* EM: inflows in 31 of past 33 weeks ($0.3bn)
By style: moderate US value fund outflows ($0.7bn), US growth first inflows for 8 weeks ($0.8bn), inflows to US small caps ($0.4bn, 5 straight week)
By sector: inflows to tech ($0.6bn), materials ($0.5bn, 10 straight week), energy ($0.4bn), financials ($0.3bn, 8 straight week), consumer ($0.3bn); outflows from health care ($0.1bn), utilities ($0.1bn), real estate ($0.4bn)
Low Debt to EV best; Low 12m Price Momentum worst in developed markets
Low Debt to EV at 2.5% was the best performing style in the developed markets in October 2017. Conversely, Low 12m Price Momentum did least well falling short of the benchmark by 2.6%. Value styles discriminated strongly with fivevalue-low in the top 12 and six value-high at the other end reversing the previous month. Quality also
discriminated strongly with three quality-high styles in the top 12 as did Momentum which behaved as expected.
High Dividend Cover best; Low 12m Price Momentum worst in emerging
In the emerging markets High Dividend Cover at 2.3% outperformance was our best performing style with Low 12m Price Momentum worst at 1.8% underperformance. Value styles again demonstrated mixed returns with two value-high styles in the top 12 and in the bottom12. Quality discriminated with two quality-high styles in the top 12 and two quality-low in the bottom 12. Growth factors also discriminated.
US Materials sector joined the overbought group
All three indicators in US increased last month. Particularly, US Materials sector joined the overbought group. For more details on methodology,
Style rotation models prefer quality in both Europe and the US
Our two style rotation models both suggest taking large positive weights in the quality style for next month, although in the US the suggested quality position is lower than last month.
WPP fights to make money in the new world of digital media
There are lessons to be learnt from the ads for PPI mis-selling claims
Martin Sorrell frets that brand owners are cutting back on advertising. Well, he would, as boss of WPP, the world’s biggest advertising holding company with businesses such as such as J Walter Thompson and GroupM. The carnivores snapping at the heels of the big herbivores have encouraged the likes of Procter & Gamble and Unilever to look to the bottom line — and spend less on promotions as a quick fix.
We are, he complains, all short-termists now. The average big US company is paying out all its profits in dividends and share buybacks, and its CEO lasts less than seven years. As he puts it: “Management is abrogating responsibility for reinvesting retained earnings back to share owners.”
Well, up to a point, Sir Martin. Most major companies seem in rude financial health while Amazon’s hugely successful no-profit business model is about as long term as commerce ever gets. Besides, worries about short-termism go back even further than his 31-year reign at WPP; they can be found in the Harvard Business Review in 1980, which argued that US companies were eating their seed corn.
WPP’s bigger worry today is how to make money in the brave new world of digital media, to get past the robot eyeballs and reach the human viewers. Yet this is not impossible. The ridiculous campaign to encourage still more claims for PPI mis-selling (a sort of QE for the masses) has encouraged 1.2m visits to the Financial Conduct Authority’s website. We do notice ads — if there’s something in it for us.
Killing ’em with information
HSBC rounded off the bank reporting season this week. Its statement runs to 58 pages — and that’s just for the third quarter. Some inside the bank, and even a few outside it, may understand the tsunami of information but for most of us the words might as well have been written in mandarin, which would at least allow HSBC’s millions of Chinese customers to be baffled in their own language.
Shareholders might worry that the bank’s common equity tier one ratio fell slightly, or that IFRS9 will shave a little more off next year. They might value “management’s view of adjusted revenue” or the “transitional own-funds disclosure”, but above all, shareholders need confidence that advances will be repaid. So when finance director Iain Mackay says he has $10bn of “excess capital” looking for a home, they should pay attention.
Excess capital is a comfort to the bank’s supervisors and a terrible temptation for a banker. Sibley’s Law says that you know what a bank will do with too much money, even if you don’t know which wall it will water with it. For HSBC, handing it to the shareholders appears to be something of a last resort.
The latest dividend gets only a passing mention (it was declared last month) and the board is merely “confident of maintaining this level”. There’s also a share buy-back programme to help mop up those shares issued to holders who opt for scrip instead of cash, and to provide fees for the bankers’ bankers.
In the bad old days when banks did not disclose profits, the level and direction of the dividend was the best guide to what was really going on in the marble halls. It’s not immediately obvious that today’s mind-numbingly detailed disclosure is much better.
When Peace reigns
Is John Peace a sell signal? Not so long ago he chaired three FTSE 100 companies, in defiance of the compliance police. He’s now down to one, the rather accident-prone Burberry, which this week announced the departure of Christopher Bailey, the design guru whom the rest of us could see wasn’t cut from CEO material.
When Sir John took the chair at Standard Chartered in 2009, the bank appeared to have sailed through the banking crisis. It turned out merely to get into the mire later and, as this week’s results showed, it’s still struggling to get out of it.
His third chair was at Experian, the credit-checking business whose database has not yet been hacked. He stood down three years ago, since when the shares have done rather well. Perhaps there’s something to be said for rationing FTSE chairmanships, after all.