After Hours Summary: ZUMZ +11%, BV +8%, RDFN +4% higher and AOBC -17%, SAIC -6%, PAY -5% lower following earnings/guidance... EFX -7% on security breach newsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance/SSS: ZUMZ +11% (reports earnings and Aug comparable sales increased 7.4%), BV +8.4%, RDFN +4.3%, AGX +4.1% (light volume), OKTA +3.2%, REVG +2.4% (light volume), CLDR +2.3%
Companies trading higher in after hours in reaction to news: KURA +27% (announces its Phase 2 trial for tipifarnib in patients with HRAS mutant relapsed or refractory squamous cell carcinomas of the head and neck met its primary endpoint), CAB +0.3% (continued strength on Bass Pro deal nearing completion)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: AOBC -17.2%, CHKE -16.1%, (light volume), TNTR -13.9%, SAIC -5.9%, PAY -5%, SIGM -1.6% (light volume), TLRD -1.2%
Companies trading lower in after hours in reaction to news: CALA -10.4% (indicated lower on light volume following Wells Fargo conference), EFX -6.8% (announced cybersecurity incident potentially impacting approximately 143 million U.S. consumers; no evidence of unauthorized access to core consumer or commercial credit reporting databases), LAND -4% (commences common stock offering; size not disclosed), INCY -2.3% (proposes public offering of 4,945,000 shares of common stock)
Asia Mid-Session Market Update: PBoC set yuan stronger for 10th straight session, USD broadly weaker; China Aug trade surplus below ests; North Korea in focus as weekend approaches
***Asia Summary***
- Asian equity markets opened mixed in line with what was seen in the US trading session. September Nikkei futures and options settled at 19,279.
- In Japan, Q2 GDP growth was revised lower amid weaker CAPEX. According to the Japanese government, the downward revision in the GDP data was the largest under the current calculation method adopted in 2010.
- China’s Aug Trade Surplus was below ests amid weaker than expected exports and higher imports.
- Fed official Dudley commented earlier in the Asian session and did not repeat expectation for a rate hike this year.
- China’s PBoC set the yuan stronger for the 10th straight session and amid this move, other Asian currencies, including the Taiwan dollar (TWD) and Hong Kong dollar (HKD) have moved higher against the broadly weaker US dollar.
- Venezuela’s President Maduro said he was planning a new FX basket to be ‘free’ of the US dollar and the exchange mechanism to work with the Chinese yuan.
- EUR/USD and AUD/USD have traded at highs not seen since 2015.
- As the weekend approaches, North Korea is in focus following the nuclear test that it conducted last weekend. Earlier in the week, it was reported in the South Korean press that North Korea was said to be preparing another intercontinental ballistic missile (ICBM) launch and that it could come around Sat, Sept 9th.
***Key economic data***
-(CN) CHINA AUG TRADE BALANCE: $42.0B V $48.5BE
-(JP) JAPAN Q2 FINAL GDP SA Q/Q: 0.6% V 0.7%E; ANNUALIZED: 2.5% V 2.9%E
-(JP) JAPAN JULY BOP CURRENT ACCOUNT ADJUSTED ¥2.03T V ¥1.65TE; CURRENT ACCOUNT BALANCE: ¥2.32T V ¥2.03TE; Trade Balance BoP Basis: ¥566.6B v ¥518Be
-(JP) JAPAN BANK LENDING EX-TRUSTS Y/Y: 3.2% V 3.4%E; INCL TRUSTS Y/Y: 3.2% V 3.3% PRIOR
-(AU) AUSTRALIA JULY HOME LOANS M/M: 2.9% V 1.0%E; INVESTMENT LENDING: -3.9% V +1.6% PRIOR
-(NZ) NEW ZEALAND Q2 MFG ACTIVITY Q/Q: 3.9% V 2.8% PRIOR; MFG ACTIVITY VOLUME: +1.0% V -0.3% PRIOR
-(CN) China Aug Retail Auto Sales: 1.9M units, +5.8% y/y - PCA
***Speakers and Press***
China
-(CN) China’s Air Force said to have conducted exercises near Korean peninsula – China State Media
Other
-(AU) RBA Assist Gov Debelle: To move open-market operations to earlier time
-(KR) South Korea: Exports to continue driving recovery; reiterates North Korea and trade negotiations risks to growth
-(US) US House Majority Leader Mccarthy (R): House will vote on Harvey package on Friday
-(US) Fed's George (hawk, non-voter): US under full employment, sees labor market continuing to tighten; inflation relatively mild; It is time to continue to move rates higher.
-(US) Fed's Dudley (voter): Reiterates balance sheet rolloff likely to start relatively soon; Don't expect Harvey to alter trajectory of US economy
-(VE) Venezuela President Maduro: To adopt new FX basket to be 'free' of the US dollar, next week DICOM exchange mechanism to work with China yuan instead of US dollar
***Asian Equity Indices/Futures (00:30ET)***
- Nikkei -0.5%, Hang Seng +0.6%, Shanghai Composite +0.2%, ASX200 -0.4%, Kospi -0.1%
- Equity Futures: S&P500 -0.2 ; Nasdaq -0.1 , Dax -0.2% , FTSE100 -0.1%
***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.2018-1.2090 ; JPY 108.05-108.49; AUD 0.8043-0.8116; NZD 0.7228-0.7325
- Aug Gold +0.2% at 1,354/oz; Aug Crude Oil +0.2% at $49.17/brl; Sept Copper -0.2% at $3.14/lb
- GLD SPDR Gold Trust ETF daily holdings flat at 836.9 tons
-(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.5032 V 6.5269 PRIOR (10TH STRAIGHT STRONGER YUAN SETTING); strongest yuan fix since May 12, 2016
-(CN) PBOC SKIPS OMO V SKIPPED PRIOR; For the week drains a net of CNY330B in liquidity vs CNY280B prior week; PBoC: Reiterated bank liquidity at 'relatively high level'
-(AU) Australia sells A$500M in 5.75% May 2021 Bonds, avg yield 2.0164%, bid to cover 7.04x (highest since at least 2007)
***Equities notable movers***
South Korea
-Hyundai Motor, 005380.KR Negotiating payments with supplier for one of its Chinese plants; -2.9%
***US markets on close: Dow -0.1%, S&P500 flat%, Nasdaq +0.1%, Russell -0.3% ***
- Best Sector in S&P500: Health Care +1.1%
- Worst Sector in S&P500: Financials -1.7%
- At the close: VIX 11.55 (-0.08 pts); Treasuries: 2-yr 1.29% (-5bps), 10-yr 2.06% (-9bps), 30-yr 2.68% (-9bps)
***US Market Summary***
-Equities traded flat to slightly lower today as the effects of Harvey and expectations for Irma begin to take their toll. US jobless claims came in the highest this week in two years. Media stocks were particularly hard hit after cautious management commentary at a conference, with Walt Disney and Comcast weighing on the broader market. The Nasdaq managed to buck the general trend with help from Microsoft and Amazon. Crude oil prices pared recent rises but held its ground on lower than expected increase in crude oil stocks; price dropped less than 0.1% on the day after having been lower. Treasury yields declined across the curve as investors reacted to more dovish comments from Fed officials; 10-year and 30-year yields dropped 6 bps each to 2.04% and 2.66% respectively. Gold continued to climb for a 9th consecutive session, reaching a new recent high at $1,349.52, before closing slightly lower.
***US Afterhours Movers***
-KURA Announces positive Phase 2 study for Tipifarnib in HRAS Mutant Head and Neck Cancer; +22.3% afterhours
-ZUMZ Reports Q2 -$0.02 v -$0.06e, Rev $192.2M v $191Me; Guides Q3 $0.43-0.48 v $0.43e, R$236-241M v $227Me, SSS +4-6%; +9.5% afterhours
-BV Reports Q1 $0.04 v -$0.00e, Rev $52.2M v $49.7Me- Adjusted EBITDA $6.7M v $3.9M y/y; +6.2% afterhours
-EFX Announces cybersecurity incident involving consumer information; potentially impacts 143M US consumers; credit card numbers for 209K consumers were accessed; -5.4% afterhours
-FNSR Reports Q1 $0.40 v $0.40e, Rev $341.8M v $342Me; Guides Q2 $0.27-0.33 v $0.49e, Rev $322-342M v $375Me; -7.6% afterhours
-AOBC Reports Q1 $0.02 v $0.11e, Rev $129M v $148Me; Guides Q2 adj EPS $0.07-0.12 v $0.23e, Rev $140-150M v $164Me; -17% afterhours
Time could receive renewed look from Meredith following divestitures – sources
07 SEP 2017
- Time UK sale process enters second round
- Leaner Time more digestible for Meredith
Time Inc [NYSE:TIME] could receive another look from Meredith [NYSE:MDP] after the magazine publisher finishes its current round of divestitures, said three sources briefed on previous talks between the companies and a sector advisor.
New York-based Time reportedly engaged Morgan Stanley and Bank of America in late 2016 following an unsolicited takeover offer from a group comprising billionaire investor Edgar Bronfman, Jr and media executives Ynon Kreiz and Len Blavatnik. Meredith, a De Moines, Iowa-based TV broadcaster and magazine publisher, also engaged in talks with Time, but no deal resulted. Instead, on 28 April, Time announced it had decided to stay independent.
Since then, Time has looked to divest non-core assets, including its portfolio of UK magazines and African-American magazine Essence, according to reports. It announced on 27 July that it had successfully sold live events business INVNT to its founding partners.
The sale process for Time UK has entered the second round, a separate source briefed on the situation said. Private equity firms that considered acquiring Immediate Media, a UK magazine publisher, are likely to target the asset. Immediate Media was sold to Hubert Burda Media, the German media company, in January this year for an undisclosed sum.
Potential bidders also include special purpose acquisition companies (SPACs) active in the media space, such as Gloo Networks [LON:GLOO], which are looking to diversify old-fashioned titles away from the traditional print and advertising model, a sector banker said. Gloo Networks, which has backing from Marwyn, an investment firm, considered placing a bid for Immediate Media, according to a press report.
The sector advisor said that completing these divests would be the “minimum” that would be required to make a takeout by Meredith more feasible. This advisor pointed to problems with the sale process early in the year as a continuing barrier, adding that “there are still challenges” in the “state of [Time’s] business” that would make a deal challenging.
New York-based Time reportedly engaged Morgan Stanley and Bank of America in late 2016 following an unsolicited takeover offer from a group comprising billionaire investor Edgar Bronfman, Jr and media executives Ynon Kreiz and Len Blavatnik. Meredith, a De Moines, Iowa-based TV broadcaster and magazine publisher, also engaged in talks with Time, but no deal resulted. Instead, on 28 April, Time announced it had decided to stay independent.
Since then, Time has looked to divest non-core assets, including its portfolio of UK magazines and African-American magazine Essence, according to reports. It announced on 27 July that it had successfully sold live events business INVNT to its founding partners.
The sale process for Time UK has entered the second round, a separate source briefed on the situation said. Private equity firms that considered acquiring Immediate Media, a UK magazine publisher, are likely to target the asset. Immediate Media was sold to Hubert Burda Media, the German media company, in January this year for an undisclosed sum.
Potential bidders also include special purpose acquisition companies (SPACs) active in the media space, such as Gloo Networks [LON:GLOO], which are looking to diversify old-fashioned titles away from the traditional print and advertising model, a sector banker said. Gloo Networks, which has backing from Marwyn, an investment firm, considered placing a bid for Immediate Media, according to a press report.
The sector advisor said that completing these divests would be the “minimum” that would be required to make a takeout by Meredith more feasible. This advisor pointed to problems with the sale process early in the year as a continuing barrier, adding that “there are still challenges” in the “state of [Time’s] business” that would make a deal challenging.
There is no guarantee that renewed interest from Meredith will lead to a formal bid for Time.
News reports pointed to Time’s European pension funds as a source of difficulty in reaching a deal earlier this year. A source previously told this news service that a change in control would lead to European pension liability costs for a buyer equivalent to roughly USD 1 per share.
Reports additionally focused on funding issues for Meredith, particularly that lenders demanded that the company not subsequently split off its television business. Two sources previously told this news service that Meredith received financing proposals from a range of banks, with one source saying that these proposals ranged from around USD 3bn to closer to USD 4bn, but that all lenders had trouble with Time’s eroding operating performance.
The main problem, though, is ultimately that there was an intractable bid-ask spread between Meredith and Time, one of the sources briefed on the matter said. In addition, Meredith contemplated a stock component to its offer, which Time did not find attractive, this source said.
Meredith and Time declined to comment.
News reports pointed to Time’s European pension funds as a source of difficulty in reaching a deal earlier this year. A source previously told this news service that a change in control would lead to European pension liability costs for a buyer equivalent to roughly USD 1 per share.
Reports additionally focused on funding issues for Meredith, particularly that lenders demanded that the company not subsequently split off its television business. Two sources previously told this news service that Meredith received financing proposals from a range of banks, with one source saying that these proposals ranged from around USD 3bn to closer to USD 4bn, but that all lenders had trouble with Time’s eroding operating performance.
The main problem, though, is ultimately that there was an intractable bid-ask spread between Meredith and Time, one of the sources briefed on the matter said. In addition, Meredith contemplated a stock component to its offer, which Time did not find attractive, this source said.
Meredith and Time declined to comment.
Closing Market Summary: Traders Hold Their Ground Despite Risk-Off ToneThe major U.S. indices had a mixed outing on Thursday, settling near their unchanged marks despite another disappointing performance from the heavily-weighted financial sector (-1.7%) and risk-off signals from other financial markets. The Nasdaq (+0.1%) eked out a narrow victory while the Dow (-0.1%) and the S&P 500 (unch) each finished a tick below their flat lines.
Prior to Thursday's opening bell, the European Central Bank announced its decision to leave interest rates unchanged. ECB President Mario Draghi added that the central bank will make a decision on its quantitative easing program later this year and risks to the outlook remain balanced. He also noted that the ECB is not targeting an exchange rate, but the level will factor into policy decisions.
The euro climbed 0.9% against the U.S. dollar to 1.2025 following Mr. Draghi's remarks, helping to send the U.S. Dollar Index (91.48, -0.73, -0.8%) to its lowest level since January 2015. The Japanese yen also weighed on the greenback, climbing 0.7% to 108.45. The yen is considered a safe-haven asset and typically does well when investors are feeling risk averse.
Other safe-haven assets, like U.S. Treasuries and gold, also did well on Thursday. Gold climbed 0.9% to $1,350.40/ozt, settling at a new high for the year, while the Treasury market rallied in a curve-flattening trade that sent the 2-yr yield (1.27%) and the 10-yr yield (2.06%) lower by two basis points and five basis points, respectively.
The flattening of the yield curve fueled concerns about net interest margins for lenders and contributed to another poor performance for the heavily-weighted financial sector, which dropped 1.7% to finish below its 200 day simple moving average (397.68). Property and casualty insurers also weighed on the financial group as Hurricane Irma creeped closer to the populous state of Florida.
Like financials, the consumer discretionary and telecom services spaces finished solidly lower, dropping 0.9% and 2.1%, respectively, but the eight remaining sectors finished in positive territory with gains ranging from 0.1% to 1.1%. The influential health care and information technology sectors finished comfortably ahead of the broader market, adding 1.1% and 0.5% respectively.
On the corporate front, Walt Disney (DIS 97.06, -4.44) dropped 4.4% after CEO Bob Iger announced that the company's earnings per share for fiscal year 2017 will be roughly in line with the 2016 figure. In addition, the company said that its Marvel and Star Wars titles will go exclusively to its planned streaming service, which is set to launch in late 2019.
General Electric (GE 24.02, -0.90) also finished solidly lower, losing 3.6%, after JP Morgan reaffirmed its underweight rating on GE shares. However, on a positive note, Restoration Hardware (RH 71.54, +22.12) surged 44.8% after beating both top and bottom line estimates and issuing upbeat guidance.
In Washington, the Senate easily passed President Trump's Wednesday agreement with Democratic lawmakers, which packages Hurricane Harvey relief funding with a three-month extension of both government funding and the debt ceiling. The measure will now be taken up in the House, where it is also expected to pass.
Reviewing Thursday's economic data, which included the weekly Initial Claims Report and revised readings for second quarter Productivity and Unit Labor Costs:
- The latest weekly initial jobless claims count totaled 298,000 while the consensus expected a reading of 239,000. Today's tally was above the unrevised prior week count of 236,000. As for continuing claims, they declined to 1.940 million from the revised count of 1.945 million (from 1.942 million).
- The key takeaway from the report is that the spike in initial claims was impacted by Hurricane Harvey, which is to say it is an aberrant reading in relation to an otherwise encouraging trend for initial claims.
- Second quarter unit labor costs were revised downward to +0.2% (consensus +0.3%) from +0.6% in the preliminary reading. Meanwhile, second quarter productivity was revised upward to +1.5% (consensus +1.2%) from +0.9% in the preliminary reading.
- The key takeaway from the report is that the subdued growth in unit labor costs will contribute to the market's thinking that the Fed has scope to hold off on another rate hike this year.
On Friday, investors will receive just two pieces of economic data--July Wholesale Inventories (consensus 0.4%) and July Consumer Credit (consensus $15.0 billion). The two reports will be released at 10:00 ET and 15:00 ET, respectively.
- Nasdaq Composite +18.9% YTD
- Dow Jones Industrial Average +10.2% YTD
- S&P 500 +10.1% YTD
- Russell 2000 +3.0% YTD
*TAKEAWAY.COM ORDERS BELOW EU37 RISK MISSING: TERMS
Vivendi nears deal with Italy watchdog to cut Mediaset stake: sources
MILAN (Reuters) - French media group Vivendi (VIV.PA) is close to reaching a preliminary deal with Italy’s communications watchdog on cutting its stake in Silvio Berlusconi’s broadcaster Mediaset (MS.MI), two sources said on Thursday.
Vivendi’s influence in Italy has come under close political and regulatory scrutiny since the French group led by billionaire Vincent Bollore built up its stake in Italy’s biggest private broadcaster Mediaset last year.
It had already tightened its grip on Telecom Italia (TIM) (TLIT.MI) and Rome is looking into whether Vivendi failed to meet an obligation to notify it of its effective control of a company which is considered a strategic national asset.
Italy’s AGCOM regulator has demanded Vivendi reduce its stake in either Mediaset or TIM to below 10 percent after ruling that by holding both it breached Italian rules meant to prevent concentration of power.
Vivendi is the biggest single shareholder in Telecom Italia with a 24 percent stake and also holds 28.8 percent of Mediaset, making it the second-largest investor after the family of former Italian Prime Minister Berlusconi.
The French company’s preliminary agreement with AGCOM should land on the desk of the regulator’s board of commissioners, who have to approve any deal, at their next meeting, which is scheduled for Sept. 13 although a final decision will not be taken until April 2018, the sources added.
The solution agreed with AGCOM envisages Vivendi transferring the Mediaset shares above the 10 percent threshold into a blind trust, one of the two sources said.
Vivendi will have one year to comply with AGCOM’s ruling if it is to avoid being fined up to 5 percent of its revenues, some 540 million euros ($648 million).