TechCrunch : SpaceX spent ‘less than half’ the cost of a new first stage on Falc

SpaceX spent ‘less than half’ the cost of a new first stage on Falcon 9 relaunch

Just how much is SpaceX actually saving with its reused Falcon 9 rockets? You might expect it to not be much, given that the SES-10 launch is the first time they’ve reused a rocket thus far. But SpaceX president Gwynne Shotwell told the Space Symposium conference that the cost of refurbishing the Falcon 9 rocket that originally flew the CRS-8 Space Station resupply mission last year for SES-10 was “substantially less than half” what it would have cost to build a brand new one.

That’s despite doing a lot to bring the recovered rocket back to operational condition, Shotwell said, according to Space News. Which means cost savings should only go up, since SpaceX did “way more on this one than we’re doing on future ones” in terms of refurbishment activities, she told the annual space industry conference.

Still, that doesn’t necessarily mean drastically cheaper launches compared to what SpaceX charges now (around $62 million, according to the company’s published figures). Elon Musk has discussed previously how much money SpaceX has spent to date on developing its reusable rocket tests, costs which will have to be recouped even as the expense associated with individual launches goes down over time.

Shotwell also talks about how SpaceX will attempt to recover the payload fairing used on launches, too. This is the housing used to protect whatever the rocket is delivering to space (satellites, supplies, etc.) from forces during launch, including aerodynamic heating. SpaceX recovered one section of the two-piece fairing during the SES-10 launch, and found that it was actually in pretty good shape. Each fairing is a $6 million expense, so reuse of that component would help decrease launch costs further still.

SpaceX CEO Elon Musk said after the successful launch that the next goal for the company is to get its reuse window down to 24 hours for following one launch with another using the same rocket.

FT : US stock funds record biggest outflows in more than 18 months

US stock funds record biggest outflows in more than 18 months
Shift toward Europe accelerates amid doubts over Trump’s policy agenda

US stock funds experienced their largest withdrawals in more than 18 months and investors extended their rotation into cheaper valued European equities according to the latest weekly flow data from EPFR.

Investors drained $14.5bn from US stock portfolios in the week to April 5, and a shift out of US equities has accelerated since the Trump administration failed to push healthcare reform through Congress. This week, Paul Ryan, the speaker of the US House Representatives said tax reform would take time to accomplish given differences between Congress and the White House.

With investors yet to see progress on the Trump administration’s plan to pass corporate tax cuts that have been central to a rally in the benchmark S&P 500 and Russell 2000 index of small companies, net assets across mutual and exchange traded funds in US stocks have fallen by $84bn from a record high set in March.

“President Donald Trump’s administration is still trying to get its bearings and struggling to advance its reflationary economic agenda,” said Cameron Brandt, the director of research at EPFR.

“The perception that Trump’s promises will take some time to materialise — if at all — prompted investors to . . . look for alternatives to US equities,” he added.

US small capitalisation stocks, seen as greater beneficiaries of tax cuts than their large-cap peers, recorded redemptions of $2.7bn in the past week, the largest weekly withdrawal since late 2015.

As doubts over US policy weigh on Wall Street, investors have embraced the growth prospects in Europe as well as the lower stock valuations across the continent, looking past risks posed by the French elections and Brexit. Funds invested in western European stocks enjoyed their largest two-week inflow in more than a year, with $876m of fresh capital added in the last week.

"We are tracking big flows out of the US into foreign markets. It is propping them up,” said Paul Christopher, a strategist at Wells Fargo Investment Institute. “There is a real perceptible improvement in the economic situation in Europe, alongside the European Central Bank’s decision to taper, and that is drawing in investors."

European bond funds also notched their largest additions in 13 weeks, with $905m of inflows during the period. Data this week showed eurozone unemployment has fallen to its lowest level in eight years, while surveys of manufacturing activity have improved.

European stocks have outperformed their US counterparts over the past month, with the FTSE Eurofirst 300 advancing 1 per cent versus a 1.3 per cent decline by the S&P 500. Spain’s Ibex 35 has climbed 7 per cent over the period while Italy’s FTSE MIB is up more than 4 per cent.

Guy LeBas, chief fixed-income strategist at Janney Capital Management, added: "There is a running joke that it is impossible to find a euro equity bear right now. And it’s true.”

Overall, investors committed more than $12bn to global bond funds and redeemed $7.4bn from global stock funds — including the large withdrawals from the US. Inflows to haven money market portfolios totalled $14.5bn.

While US stock markets have lost momentum amid the political wrangling, the reflation trade remains buoyant abroad. Roughly $2.4bn poured into emerging market equity funds, helping lift inflows since the start of the year to $13bn and pushing the MSCI emerging markets index up 3 per cent over the past month. Emerging market bond funds counted their tenth consecutive week of inflows, taking in a further $2bn.

Dirk Willer, an emerging markets strategist with Citi, said that despite broad economic activity losing some momentum, recent activity data remain healthy.

“There is nothing to suggest as yet that the emerging market business cycle recovery is threatened,” he said. “We also take comfort that low US Treasury yields and a soft dollar would offer some buffer to emerging markets from a brief equity or commodity market correction.”

>>> US Close

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Closing Market Summary: Stocks Survive Afternoon Retreat to Close Thursday Higher

The major averages registered modest gains on Thursday, keeping the S&P 500 (+0.2%) several points above its 50-day moving average (2346). The benchmark index settled near the middle of the day's range while the Nasdaq and Dow added 0.3% and 0.1%, respectively. Also of note, the domestically-oriented Russell 2000 bounced back from its disappointing performance yesterday to settled higher by 0.9%.

Stocks pushed into positive territory early in the morning session, where they comfortably remained until the afternoon. Then, without warning, equities gave back nearly all of their modest gains in an early-afternoon move towards their flat lines. There was no clear catalyst behind the sudden move, but it is clear that comments from President Trump and Secretary of State Rex Tillerson didn't do anything to alleviate the bearish sentiment.

Mr. Trump said the United States is prepared to act alone on North Korea if China is not willing to assist. In addition, the president and Secretary of State Rex Tillerson signaled that something needs to be done about Syrian President Bashar al-Assad. Recalling that investors were already a little antsy ahead of President Trump's two-day meeting with Chinese President Xi Jinping, the comments added to the underlying anxiety.

The leaders of the world's two largest economies will have the opportunity to clear the air over the next couple of days, kicking off their two-day talks with dinner this evening in Palm Beach, FL. Investors will be keeping a close eye on reports from the discussions, hoping for a positive signal to keep the bears at bay. 

In terms of sector standings, cyclical groups had the upper hand on their countercyclical peers throughout the day's action. The energy group (+0.8%) acted as a pillar of strength in the cash market with crude oil underpinning the positive performance. The commodity closed the day 1.1% higher at $51.71/bbl, marking its seventh advance in eight sessions.

Retailers provided the consumer discretionary sector (+0.4%) with some strength, evidenced by the 2.0% increase in the SPDR S&P Retail ETF (XRT 41.65, +0.83). The positive sentiment was attributed to several companies reporting better than expected same-store sales for the month of March.

Conversely, the technology sector (-0.1%) was the only cyclical group to settle in the red after a lackluster performance from some of its top components like Apple (AAPL 143.66, -0.36), Alphabet (GOOGL 845.10, -3.82), and Facebook (FB 141.17, -0.68). Similarly, most countercyclical sectors finished in negative territory with the telecom services group (-1.6%) closing at the bottom of the day's leaderboard.

In the Treasury market, Treasuries settled just below their unchanged marks with the benchmark 10-yr yield closing one basis point higher at 2.34%. Today's downtick follows yesterday's counter-intuitive move which left U.S. sovereign debt higher despite the FOMC Minutes showing that the Fed plans to start unwinding its balance sheet later in the year.

On the data front, investors only received one notable economic report--Initial Claims--in today's session:

  • The latest weekly initial jobless claims count totaled 234,000 while the consensus expected a reading of 245,000. Today's tally was below the revised prior week count of 259,000 (from 258,000). As for continuing claims, they declined to 2.028 million from the unrevised count of 2.052 million.
    • This data won't affect the outlook for the March Employment Situation Report, yet it continues to be reflective of an improving labor market.

Tomorrow, investors will receive the March Employment Situation Report (consensus 180,000) at 8:30 ET, February Wholesale Inventories (Consensus 0.4%) at 10:00 ET, and February Consumer Credit consensus $14.0 billion) at 15:00 ET.

(Janus) MERGER AND ACQUISITION CLIMATE IS PROMISING – ESPECIALLY IN THE U.S.

MERGER AND ACQUISITION CLIMATE IS PROMISING – ESPECIALLY IN THE U.S.

We think the U.S. has a marginally more favorable climate for deals, based on our expectation of better economic conditions, lower tax rates, repatriation and less regulatory oversight. A strong equity market in the U.S. is a good currency, too. Rising rates certainly add a little pressure, but we think better growth prospects and the other factors we mentioned earlier are important enough to keep the trend strong. We could see U.S. companies buying other U.S. firms or buying foreign firms. Naturally, this is a broad generalization, as many multinationals based outside the U.S. also have acquisition appetites.
In terms of sectors, we think health care and technology are areas with important activity. In tech, we expect industry trends to drive consolidation in subsectors such as semiconductors and software. Big pharma in general have a need to fill pipelines, and promising biotechnology can be attractive targets. Sector predictions are tricky, however. One catalyst for mergers and acquisitions (M&A) is competitive response to other deals. Therefore, we may see a sequence of deals in an unexpected area, simply in response to similar acquisitions.
In terms of the mix between property plant and equipment (PP&E) and M&A, the question comes up in industrials, where we’ve seen a reluctance to invest, but a decent amount of M&A. We think PP&E spending picks up this year, but not at the expense of M&A. Most of the deals will be to add markets or specific products or intellectual property. Capital expenditures will be to expand or modernize facilities. We do not think these two need to be mutually exclusive, as long as returns on the projects are attractive and capital markets remain robust, as they are now.
For more equity insights, visit our Global Sector Views and quarterly Ski Report Equity Outlook.

>>> Schäuble Against European Bad Bank

Finance Minister Wolfgang Schäuble (CDU) supports the idea of creating bad banks in Europe, just not an overall European bad bank, Handelsblatt has learned.

EU finance ministers plan to discuss how to tackle Europe’s mountain of bad loans on Saturday, and sources said that a proposal for a European Union-wide bad bank will likely be passed over in favor of Mr. Schäuble’s recommendation that national bad banks be established.

This could be done “on the basis of a uniform blueprint approved by the European Commission,” according to a position paper from the German finance ministry obtained by Handelsblatt.

Germany’s finance minister rejects the idea of an EU bad bank based on the differing conditions in individual countries. Instead, there could be a European program “with mandatory dismantling targets” for bad loans, the ministry said.

Banks in the European Union have accumulated bad loans totaling €920 billion ($980 billion) on their balance sheets. Greece, Cyprus, Portugal and Italy are all directly affected. The unresolved issue of bad credit also affects “the overall perception of the European banking sector in the markets, particularly within the European banking community,” the paper says.

Malta’s Finance Minister Edward Scicluna, who chairs the EU’s Economic and Financial Affairs Council, will host his colleagues from the other 27 EU member states this weekend at an informal meeting of the council in his native city of Valletta.

The vice president of the European Commission responsible for banking regulation, Valdis Dombrovski, wrote in a letter to Mr. Scicluna obtained by Handelsblatt that “the high percentage of non-performing loans” has “negative effects on long-term economic growth and financial stability” in Europe.

The German position is that non performing loans are a problem in some member states, but are not a European phenomenon, and should be dealt with on a national level.

The stance is a knock back for EU banking monitor Andrea Enria who had at the end of January called for the non performing loans to be transferred from the banks’ balance sheets to a European asset management company, tasked with combining the loans into bundles, securitizing them and selling them with a state guarantee on the capital markets within three years. To appease those who objected to asset transfer across the EU the losses incurred would have to be borne by the banks or states from where the bad loans come.

But Mr. Enria found few supporters for his plans, and his proposals aren’t expected to play a major role at the finance ministers’ meeting in Malta on Saturday.