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Ethiopian Airlines CEO expects settlement with Boeing by end-June

Ethiopian Airlines expects a settlement with planemaker Boeing by end of June over the crash of an 737 MAX plane in March 2019, CEO Tewolde Gebremariam told Reuters on Friday......»»

Category: topSource: reutersMay 15th, 2020

Germany doesn"t want you to pay for a flight until the day you fly. It could cure the nightmare of trying to get refunds on cancelled travel.

Americans are struggling to receive refunds following flight delays and cancellations. A German state is proposing a "pay as you fly" solution. James D. Morgan/Getty Images Americans are struggling to receive refunds following flight delays and cancellations amid a summer of travel chaos. The Department of Transportation is working to improve the refund experience. One German state is proposing a "pay as you fly" model that would make refunds less necessary. While the US is working to make it easier for customers to receive flight refunds, Germany is trying to eliminate the need for refunds altogether. In August, the German state of Lower Saxony called for the abolishment of advance payment for flight bookings — and the implementation of a "pay as you fly" model in which customers' payments aren't processed until they check in at the airport. When a passenger's flight is canceled, there's no need for a refund if they haven't paid for it yet. "It makes intuitive sense," Scott Keyes, founder of Scott's Cheap Flights, told Insider. "You don't pay for your hotel until you check out. Ditto with your car rental. There's certainly some elegance in having the same setup with the other major part of travel—flights."Under the current model, some have argued customers are effectively making airlines "interest-free loans" — loans many have had a difficult time collecting on. Over Labor Day weekend, thousands of Americans faced flight delays or cancellations, and since Memorial Day, there have been over 50,000 cancellations and over 500,000 delays. Many fliers have sought reimbursement and had a hard time receiving it — the Department of Transportation received over 1,400 complaints in June related to refunds. While the DOT is pushing airlines to make the refund experience more palatable, Germany's proposal could provide an alternative moving forward.Keyes says the "pay as you fly" model has a lot of appeal but that he has one main concern. "Airlines would have to grapple with far more canceled reservations than exist today," he said. "And they would almost certainly respond by raising fares en masse. How much and how quickly is hard to determine, and that's why I'd be glad to see this tested out in foreign markets."He adds, however, that airlines have "long resisted change to their business model, only to find that it worked out fine when they do." Pre-pandemic, most US airlines charged significant fees when customers changed or canceled their flights. But while many of these fees were dropped in 2020 to entice customers, airlines have still managed to generate "major profits" this year."The sky didn't fall," said Keyes. "And that's why I'm not entirely convinced a 'pay as you fly' method would necessarily result in more expensive flights."The US Department of Transportation is pushing for other reformsWhile a "pay as you fly" system may not come to the US anytime soon, the Department of Transportation has taken some steps to combat the refund crisis. Last November, the Department of Transportation agreed to a $4.5 million settlement with Air Canada following "extreme delays" in refunds for thousands of US customers. In July, US Transportation Secretary Pete Buttigieg said the department had completed 10 investigations into delayed or withheld flight refunds, adding that an additional 10 investigations were still ongoing. In August, the Department of Transportation announced a proposed rule that would aim to strengthen protections for US fliers seeking refunds. If enacted, customers would become eligible for a refund when they experience changes to their departure or arrival time by three hours or more, changes to their departure or arrival airport, or changes to their number of connections. "This new proposed rule would protect the rights of travelers and help ensure they get the timely refunds they deserve from the airlines," Secretary Buttigieg said in a department release. While the rule is just a proposal and has not been signed into law, travel industry analyst Henry Harteveldt, told Select that the proposal has a "decent chance" of getting enacted, though it could see modifications. On September 1st, the DOT launched a customer service dashboard to help fliers decipher what services and amenities they are entitled to when they experience delays and cancellations. Per the Department's release, none of the 10 largest US airlines have historically guaranteed meal vouchers or hotels to passengers experiencing cancellation or delays. Today, however — following a department push to improve these accommodations — nearly all major airlines have made these guarantees. Moving forward, Keyes expects airlines to begin offering more vouchers to incentivize people on crowded flights to switch to less crowded ones. "Right now, airplanes are more full than they were pre-pandemic, and airlines are increasingly trying to entice people to switch to less crowded flights days before the trip will actually begin," he said, citing a $55 voucher he was offered in recent weeks to modify his trip.  Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 7th, 2022

A Swiss company is responsible for creating almost all of the airline food served on planes worldwide. See inside the 132,000-square-foot facility.

Gate Gourmet chefs chop 500 pounds of potatoes and up to 1,000 pounds of chicken every day to prepare thousands of meals for international flights. Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/Insider Gate Gourmet's 132,000-square-foot kitchen in Washington, DC prepares thousands of meals every day for international flights. Chefs make the food from scratch, including chopping up to 1,000 pounds of chicken and 400 pounds of carrots. Workers are responsible for cooking, cooling, and storing meals before they're reheated on the plane, ensuring food is kept fresh. After the onset of the COVID-19 pandemic, airlines worldwide were forced to change how food was prepped and served on flights.Economy food on a JetBlue flight.Thomas Pallini/InsiderWhile business and first class meals like beef and salmon were suspended on many domestic routes, long-haul international flights kept the food. But, touchpoints were reduced and the dishes were served in one course instead of multiple.Flying on an Emirates A380 from New York to Dubai.Thomas Pallini/InsiderFortunately, as the spread of COVID weakens, full-service meals are coming back to premium cabins, and catering companies are working hard to meet demand.Flying JetBlue Airways from London to New York in Mint business class.Thomas Pallini/InsiderSwitzerland-based Gate Gourmet is the world's leading provider of airline food that caters hundreds of millions of meals per year at over 200 airports across 60 countries. It has 30 locations in the US.Sundry Photography/ShutterstockAll of the airports have large kitchens where employees prepare and hand cook each individual dish based on recipes created by master chefs.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderGate Gourmet's North American headquarters is in Washington, DC, where a 132,000-square-foot kitchen and hundreds of employees are responsible for handling almost all of the food for the dozens of international flights that leave Dulles International Airport every day.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderThe DC location, which is a 24/7 operation and has workers representing over 35 nationalities, prepares food for carriers like United Airlines…A United Airlines airplane is seen at the Newark Liberty International Airport in Newark, New Jersey, United States.ayfun Coskun/Anadolu Agency via Getty Images…British Airways…A British Airways Airbus A380.Thiago B Trevisan / Shutterstock.com…Air France…Air France.Horacio Villalobos Corbis/Corbis via Getty Images…and Virgin Atlantic Airways.Virgin Atlantic.EQRoy/ShutterstockJim Stathakes, the general manager of Gate Gourmet's Dulles operation, took media on a tour of the facilities. Take a look inside the kitchen and see how airplane food is made from scratch.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderThe tour started at the sanitation station right before entering the main food prep area. Regardless of COVID-19, Gate Gourmet has always had a very strict hygiene policy to ensure all meals are kept clean and healthy.Sanitation station.Taylor Rains/InsiderBecause of this, I had to use a specialty washer to clean my hands and shoes, as well as wear a white coat, a mask, and a red hair net to walk the floor.The water, which had a special cleaner in it, washed off my hands and arms. I simultaneously stood on a pad that cleaned the bottom of my shoes.Taylor Rains/InsiderOnce inside, we learned about the process of turning raw ingredients into meals and how the company stores and transports those dishes for each flight.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderAs opposed to popular belief, most airline food is not days-old prepackaged, frozen food. In actuality, Gate Gourmet prepares each dish within 24 hours of it landing on a passenger's tray table, meaning it is perfectly fresh.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderAccording to Basil Rafreedie, one of the DC kitchen's executive chefs, employees must follow specific recipes.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderMoreover, each menu item is designed to use moisture and other elements, like savory umami, to ensure the food tastes as good in the sky as on the ground.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderAccording to a British Airways menu design manager, Sinead Ferguson, passengers lose 33% of their ability to taste at high altitudes.Economy food on British Airways.Thomas Pallini/InsiderSource: Peter GreenburgFood prep includes chopping over 500 pounds of potatoes, 400 pounds of carrots, and up to 1,000 pounds of chicken per day, among other ingredients.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderInventory also includes things like giant cans of soup and beans…Workers could go through 12 cans of tomato sauce per day.Taylor Rains/Insider…dozens of produce items, like tomatos, turnips, beets, and cabbage…There are employees specifically tasked with washing produce.Taylor Rains/Insider…meat, like beef, salmon, and pork…Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/Insider…tubs of spices and sauces…Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/Insider...pastries...Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/Insider…alcohol…Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/Insider…and soda cans, which differ in size depending on the airline.Can sizes change, with European carriers typically having smaller sodas.Taylor Rains/InsiderProfessional cooks prepare the entrees and core parts of the meal, while other workers are responsible for cutting simpler things like fruit and cheese and preparing them as side dishes or snacks.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderWhen it comes to hot food, there are strict processes to follow, including chilling the cooked meals before they are reheated via ovens on the plane. Microwaves are not installed onboard for safety reasons.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/Insider"The iPad will show the cooks all the recipes they have to prepare that day, how to make it, and when each flight leaves," Rafreedie said. "When they're done cooking, they have to take the temperature of the food and it has to be at a minimum temperature."Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderThe cooling process, which includes putting the meals in front of a blast chiller, is very specific, but essential for keeping the food safe, fresh, and healthy.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/Insider"They have two hours to get the food below 70 degrees, and once it hits 70, they have another four to get it below 41 degrees," he said. "If the food doesn't make it, it goes to the trash."Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderRafreedie told Insider that the employees are good at managing the temperature, and that "not much" food is thrown out. However, he explained that there are ways to speed the process along if some food is slow to cool, like putting it in ice.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderMeanwhile, Gate Gourmet is also responsible for ensuring the meals stay fresh in case of a flight delay.Produce storage room.Taylor Rains/Insider"We have people outside that monitor the temperature, so if the food goes over 50 degrees for a certain amount of time, we have to change the entree out," he explained. "However, newer planes have chillers, so the cold food stays cold. It's the hot food we have to worry about."Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderThere are many times when the company has to replace food because of delays or cancellations, but Rafreedie said they keep the meals in the kitchen if they know of the delay in advance. Moreover, the chefs will cook extra food as a buffer just in case.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderGate Gourmet has a separate room for preparing specialty food, like religious and medical meals. Rafreedie told Insider they are kept separate to ensure there is no cross-contamination from regular dishes.Inside Gate Gourmet's Washington Dulles kitchen.Inside Gate Gourmet's Washington Dulles kitchen.Once meals are fully cooked, they are put in containers and prepped for passengers. Gate Gourmet provides all the plates and equipment needed for the meals, including washing them between flights.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderWhen the workers build the meals, meaning getting every dish, plate, and snack ready for transfer, they know the exact equipment needed and will ensure the right quantity is given to the inflight crew.Stock of glassware.Taylor Rains/InsiderOnce every dish is ready to go, they are stored in a "stage and holding cooler." The large room is where the international food sits before it is sent to the plane via truck.Stage and holding room.Taylor Rains/InsiderThe branded trucks can rise high enough to load food into widebody planes, like the Boeing 787 Dreamliner that frequents Dulles airport.The truck is stabilized with four feet that fix themselves to the ground.Taylor Rains/InsiderThe specific food I saw in the cooler was going on a transatlantic flight Tuesday evening and would be served in business or first class cabins. The food had a green stripe on the container to indicate to workers that the food was made the night before.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderThe color-coded system has a different color for each day of the week. For example, green means a dish was made on Monday, while brown means it was made on Tuesday.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderRafreedie told Insider that most of the meals will be served to passengers in the containers they come in, like those traveling in economy or premium economy.Economy food on a British Airways flight.Thomas Pallini/InsiderHowever, flight attendants serving business or first class will transfer the meals to glassware, enhancing the luxury experience. According to Rafreedie, there are step-by-step instructions provided to the flight attendants on how to plate the food.Virgin Atlantic first class food. The airline serves a three-course meal.Virgin Atlantic AirwaysSome airlines, including Turkish and Austrian, actually have onboard chefs that are responsible for presenting the food in decorative ways and adding additional flavorful touches, like spices and sauces.Austrian Airlines onboard chef garnishes a dishAustrian AirlinesJoshua Janow, Gate Gourmet's president of North America, explained the company is getting back to pre-pandemic operations as travel returns. Specifically, the company expects to reach 90% of the volume it produced in 2019, and exceed that by 2023.Meal building space.Taylor Rains/Insider"We're seeing a lot of return this spring, so it's a really big ramp up," Janow said. "A lot of transatlantic flights coming back, volumes increasing overall."Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderAs of March, the company has about 7,500 employees across the US and is making its way back to 2019 levels when it employed some 10,000 people.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/Insider"We've been working with a couple of Afghani settlement organizations and [DC] is one of a few of our units that have been able to link in with these organizations and actually provide several individuals who have come to this country with work," he explained.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderAfter the tour, I got to indulge in some of the meals that have been served on airlines. Molly Brandt, who is Gate Gourmet's innovative chef for North America, explained how she plays a role in developing the food.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/Insider"Gate Group made an active decision to invest moving the needle in airline catering, so my role does not interact with the operation, it is strictly for development purposes," she said.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderMore simply, Brandt is responsible for creating innovative and different menus and presenting them to customers. From there, the meals can be tailored based on budget, brand, and specific wants for each airline.Inside Gate Gourmet's Washington Dulles kitchen.Taylor Rains/InsiderI tried several dishes made by the chefs, like pimento cheese dip…Trying Gate Gourmet dishes.Taylor Rains/Insider…Impossible meatballs…Trying Gate Gourmet dishes.Taylor Rains/Insider…and butternut squash custard.Trying Gate Gourmet dishes.Taylor Rains/InsiderEvery meal was delicious. It was clear from the entire tour and experience that Gate Gourmet is focused on designing menus that give passengers an enjoyable onboard dining experience.Trying Gate Gourmet dishes.Taylor Rains/InsiderRead the original article on Business Insider.....»»

Category: worldSource: nytMar 20th, 2022

Futures Drift Lower In Illiquid Session As Virus Fears Resurface

Futures Drift Lower In Illiquid Session As Virus Fears Resurface After three days of torrid gains, US futures and European markets fell as concerns about economic risks from restrictions to control the new variant outweighed optimism about the efficacy of vaccines after a study from Japan found that the omicron variant is 4.2 times more transmissible (as largely expected) in its early stage than delta. Both S&P 500 and Nasdaq futures dropped around -0.4% as traders awaited earnings from Broadcom, Oracle and Costco after the market close and tomorrow's key CPI print, while European equities drifted lower in quiet trade with little fresh news flow to drive price action. Uncertainty about monetary policy could keep stocks “significantly volatile,” according to Pierre Veyret, a technical analyst at ActivTrades in London. “Investors are likely to remain cautious and keep on monitoring the macro outlook, especially today’s U.S. initial jobless claims, in order to gather more clues on what and when could be the Fed’s next move,” said Veyret. In Asia, China Evergrande Group and Kaisa Group Holdings Ltd. officially defaulted on their dollar debt, while the People’s Bank of China raised its foreign currency reserve requirement ratio for a second time this year after the yuan climbed to the highest since 2018. Among individual moves, CVS Health Corp. jumped in pre-market trading after saying it would buy back shares and raise dividends. Drugmakers including Pfizer rose, while travel companies and airlines declined. European stocks erased gains of as much as 0.3% with the Stoxx 600 trading -0.1% in the red as investors weigh new economic restrictions prompted by the omicron variant against earlier optimism. The real estate subgroup was best performer, up 0.7%; energy company shares lead declines with a drop of 1.2%. The Euro Stoxx 50 is down 0.25%, reversing a modest push into the green at the open. Other cash indexes trade either side of flat. Oil & gas and retail names are the weakest sectors. UniCredit SpA rose after saying it will return at least 16 billion euros ($18.1 billion) to shareholders by 2024. Meanwhile, Electricite de France SA fell with the government considering a cap on regulated power tariffs to help curb soaring electricity prices. Here are some of the biggest European movers today: LPP shares rose as much as 12% after its 3Q earnings beat expectations. The figures confirm a rebound of sales in traditional stores and stronger margins, according to analysts. UniCredit shares gain as much as 8.4%, the most since November 2020, after the Italian lender unveiled its new strategic plan that includes the distribution of at least EU16b to shareholders by 2024. Société Marseillaise du Tunnel Prado Carénage (SMTPC) shares rise as much as 5.5% after Vinci Concessions and Eiffage said they reached a pact to act in concert for a tender offer at EU27/share. Zur Rose drops as much as 7.3% in Zurich after an offering of 650,000 shares priced at CHF290 apiece, representing a 12% discount to the last close. Neste Oyj shares slid as much as 5.7% as investors digested the unexpected resignation of Chief Executive Officer Peter Vanacker from the helm of the world’s biggest maker of renewable diesel. FirstGroup shares fall as much as 5.9% after 1H results, with Chairman David Martin saying the U.K.’s work-from- home edict will “clearly have an impact” on commuter trips. There are potential downside risks to estimates in the short term, if Covid restrictions tighten, according to Liberum (buy). Dr. Martens released solid 1H results, but there’s “nothing material to flag” and unlikely to be upgrades to FY Ebitda estimates, Morgan Stanley says in a note. Shares drop as much as 5.2% after initially gaining 8.9%. Electricite de France shares fall as much as 5.1% after Le Figaro said the French government is considering taking additional steps to keep electricity prices from rising too much amid a spike in energy costs. The global equity rally will be tested as traders expect volatility until there’s more clarity on omicron’s threat to the economy, and ahead of U.S. consumer inflation numbers this week and a Federal Reserve meeting next week that may provide clues on the pace of tapering and interest rate increases. “We are looking to potentially have a rise in volatility even if the market continues higher around those events next week,” said Frances Stacy, Optimal Capital portfolio strategist, on Bloomberg Television. “Many of the catalysts that gave us this boom out of Covid are slowing. And then you have the Fed potentially tapering into a decelerating economy.” Geopolitical tensions are also adding to investor concerns. Germany’s new foreign minister Annalena Baerbock doubled down on warnings from western politicians to Russia over Ukraine, saying that Moscow would pay a high price if it went ahead with an invasion of its neighbor. Separately, the U.S. said it will place SenseTime Group Inc. on an investment blacklist Friday, accusing the artificial intelligence startup of enabling human rights abuses. That’s after the U.S. House of Representatives on Wednesday passed legislation designed to punish China for its treatment of Uyghur Muslims in the country’s Xinjiang province. Asian stocks rose for a third day as investors reassessed concerns over the new virus strain and factored in the possibility that the Federal Reserve will accelerate the end of its quantitative easing.  The MSCI Asia Pacific Index added as much as 0.5%, extending its advance since Tuesday to almost 3%. Information technology and communication services were the sectors providing the biggest support to the climb, with benchmarks in China and Hong Kong among the region’s best performers. The CSI 300 Index gained 1.7% as consumer stocks rallied.   “The market had been initially wary of the Fed’s hawkish tilt in their stance, and a change in how they view inflation, but investors don’t seem too worried about it anymore,” said Tetsuo Seshimo, a fund manager at Saison Asset Management Co. “But this isn’t a theme that’s going away in the short term.”  Asia’s benchmark headed for its highest since Nov. 25, set to erase losses since the omicron variant was detected during the U.S. Thanksgiving holidays, but still in negative territory for 2021. The S&P 500 Index is up 25% this year, after gaining Wednesday on announcements by Pfizer Inc. and BioNTech SE that early lab studies showed a third dose of their Covid-19 vaccine neutralizes the omicron variant. “Funds are flowing into growth stocks with high estimated profit growth and ROE levels, a continuation of moves seen from yesterday,” said Takashi Ito, an equity market strategist at Nomura Securities in Tokyo. “But there could be some profit taking after the market rose for a few consecutive sessions.” Japanese stocks fell, cooling off after a two-day rally as investors weighed the potential impact of the omicron variant on the global economy. Electronics and auto makers were the biggest drags on the Topix, which fell 0.6%. Fanuc and Tokyo Electron were the largest contributors to a 0.5% loss in the Nikkei 225 Indian stocks ended higher, after swinging between gains and losses several times through the session, as traders shifted their focus to key economic data globally and at home in the days ahead.  The S&P BSE Sensex rose 0.3% to close at 58,807.13 in Mumbai, after falling as much as 0.5% earlier in the day. The gauge has gained 3.6% in the last three sessions, its biggest three-day advance in over a seven-month period, on optimism the economic recovery will be resilient despite the spread of the new Covid variant, with the RBI continuing its policy support intact.  The NSE Nifty 50 Index also advanced by similar magnitude on Thursday. Reliance Industries Ltd. contributed the most to the Sensex gain, rising 1.6%. Out of 30 shares in the Sensex index, equal number of stocks rose and fell. Fifteen of 19 sectoral indexes compiled by BSE Ltd. gained, led by a gauge of capital goods companies. The Reserve Bank of India kept borrowing costs at a record-low on Wednesday and voted 5-1 to retain its accommodative policy stance for as long as is necessary, reflecting its bias to support economic growth. The RBI expects the economy to expand 9.5% expansion in the year ending March, one of the fastest paces among the major growing world economies.  Markets’ focus will now shift to U.S. inflation data this week and a Federal Reserve meeting next week, which may provide clues on the pace of tapering and policy tightening. India will release its factory output data on Friday and consumer-price inflation on Monday.  “All eyes will be on crucial macro data (CPI & IIP) outcome which may further provide some direction to the markets,” Ajit Mishra, vice-president research at Religare Broking Ltd., wrote in a note. “The focus will remain on the global cues and updates regarding the new variant. We reiterate our cautious yet positive stance on the markets and suggest traders to focus on managing risk.” Australian stocks edged lower as miners, consumer shares retreated. The S&P/ASX 200 Index fell 0.3% to close at 7,384.50, snapping a four-day winning streak. Miners and consumer discretionary shares contributed the most to the benchmark’s decline. Redbubble was the worst performer, dropping the most since Oct. 14. Sydney Airport was among the top performers after regulators cleared a proposed takeover of the company. The stock also joined a global rally in travel shares after Pfizer and BioNTech said initial lab studies show a third dose of their Covid-19 vaccine may be effective at neutralizing the omicron variant. In New Zealand, the S&P/NZX 50 index fell 0.8% to 12,771.83 In rates, Treasury yields were mostly lower, led by the long end of the curve, while underperforming German bunds. 10Y TSY yields are lower by ~2bp at 1.4973%, trailing declines of 3bp-5bp for most European 10-year yields but remaining above 200-DMA, which it closed above Wednesday for first time since Nov. 29. Treasury futures trade near session highs, with cash yields lower by 3bp-4bp from the 5-year sector to the long end, inside Wednesday’s bear-steepening ranges. European bond markets lead the move, led by Ireland which cut 2022 issuance plans, as virus concerns weighed on most equity markets. U.S. auction cycle concludes with $22b 30-year reopening at 1pm ET, following two Fed purchase operations. Wednesday’s 10Y reopening auction drew 1.518%, tailing by about 0.4bp; Tuesday’s 3Y, which drew 1.000%, also trades at a profit, yielding 0.989% The WI 30Y yield 1.865% is below auction stops since January as sector has benefited from expectations that Fed rate increases beginning next year may strain the economy, as well as from strong equity-market performance driving increased allocation to bonds In FX, the Bloomberg Dollar Spot Index resumed its ascent, climbing 0.2% as the dollar advanced versus all Group-of-10 peers apart from the yen. TRY and ZAR are the weakest in EMFX.  The euro retreated, nearing the $1.13 handle and after touching a one-week high yesterday. One-week volatility for euro and sterling has risen to multi-month highs, with meetings by the Federal Reserve, the European Central Bank and the Bank of England in focus. The British pound fell as Goldman Sachs Group Inc. pushed back its forecast for a U.K. rate hike and business groups called for government support after Prime Minister Boris Johnson announced restrictions to curb the spread of the variant, which Bloomberg Economics estimates could cost the economy as much as 2 billion pounds ($2.6 billion) a month. A study found omicron is 4.2 times more transmissible than the delta variant in its early stages.   The pound hovered near its lowest level in more than a year against the dollar as fresh coronavirus restrictions weighed on the U.K.’s economic outlook. Expectations that the Bank of England will raise interest rates next Thursday continue to wane, with markets pricing less than six basis points of hikes. Goldman pushed back its forecast for a U.K. rate hike and business groups called for government support after Prime Minister Boris Johnson announced restrictions to curb the spread of the variant, which Bloomberg Economics estimates could cost the economy as much as 2 billion pounds ($2.6 billion) a month. A study found omicron is 4.2 times more transmissible than the delta variant in its early stages. Norway’s krone led losses among G-10 currencies as it snapped a three-day rally that had taken it to an almost three-week high against the greenback. In commodities, Crude futures drift lower. WTI slips back near $72 having stalled near $73 during Asian trade. Brent dips 0.5%, finding support just above $75. Spot gold trades flat near $1,782/oz Looking at the day ahead now, and it’s a quiet one on the calendar, with data releases including the US weekly initial jobless claims, as well as the German trade balance for October. Market Snapshot S&P 500 futures down 0.2% to 4,691.00 STOXX Europe 600 up 0.2% to 478.52 MXAP up 0.4% to 195.63 MXAPJ up 0.7% to 638.47 Nikkei down 0.5% to 28,725.47 Topix down 0.6% to 1,990.79 Hang Seng Index up 1.1% to 24,254.86 Shanghai Composite up 1.0% to 3,673.04 Sensex up 0.3% to 58,839.03 Australia S&P/ASX 200 down 0.3% to 7,384.46 Kospi up 0.9% to 3,029.57 Brent Futures down 0.3% to $75.58/bbl Gold spot up 0.0% to $1,783.15 U.S. Dollar Index up 0.20% to 96.09 German 10Y yield little changed at -0.34% Euro down 0.2% to $1.1318 Top Overnight News from Bloomberg European Central Bank governors are to discuss a temporary increase in the Asset Purchase Program with limits on the size and time of the commitment at a Dec. 16 meeting, Reuters reports, citing six people familiar with the matter Hungary raised interest rates for a fifth time in less than a month as policy makers try to rein in the fastest inflation in 14 years. The central bank hiked the one-week deposit rate by 20 basis points on Thursday to 3.3%, broadly matching the median estimate in a Bloomberg survey China’s central bank has signaled a limit to its tolerance for the yuan’s recent advance by setting its reference rate at a weaker-than-expected level China Evergrande Group and Kaisa Group Holdings were downgraded to restricted default by Fitch Ratings, which cited missed dollar bond interest payments in Evergrande’s case and failure to repay a $400 million dollar bond in Kaisa’s. Evergrande Group’s inability to meet its obligations will be dealt with in a market-oriented way, the head of the nation’s central bank said PBOC is exploring interlinking the e-CNY, as the digital yuan is known, system into the Faster Payment System in Hong Kong, says Mu Changchun, head of the Chinese central bank’s Digital Currency Institute Money managers have shown some tentative signs that they may be willing to start buying more Chinese dollar bonds again, after demand for the securities plunged to a 27-month low in November Greece plans to early repay the total amount of IMF’s bailout loan to the country in the first quarter of 2022, Finance Minister Christos Staikouras says in a Parapolitika radio interview The omicron variant of Covid-19 is 4.2 times more transmissible in its early stage than delta, according to a study by a Japanese scientist who advises the country’s health ministry, a finding likely to confirm fears about the new strain’s contagiousness Pfizer will have data telling how well its vaccine prevents infections with the omicron variant before the end of the year A detailed look at global markets courtesy of newsquawk Asian equity markets eventually traded mixed as the early tailwinds from the US gradually waned despite the recent encouragement on the vaccine front. All major US indices were underpinned in which the S&P 500 reclaimed the 4,700 level and approached closer to its ATHs, while Apple extended on record levels and moved closer to USD 3tln valuation. The ASX 200 (-0.3%) was initially kept afloat by resilience in defensives, although upside was restricted amid weakness in tech alongside concerns of a further deterioration in ties with China after Australia’s decision to boycott the Beijing Winter Olympics. The Nikkei 225 (-0.5%) was rangebound with the Japanese benchmark stalled by resistance ahead of the 29k level, although the downside was cushioned by recent currency weakness and a modest improvement in the Business Survey Index. The Hang Seng (+1.1%) and Shanghai Comp. (+1.0%) outperformed after China’s NDRC pledged support measures to boost consumption in rural areas and with some chatter regarding the possibility of another RRR cut in Q1 next year according SGH Macro citing a senior Chinese official. Furthermore, participants digested mixed inflation data from China including firmer than expected factory gate prices. CPI Y/Y was softer than forecast but it still registered the fastest pace of increase since August last year. Finally, 10yr JGBs briefly declined below the 152.00 level following the bear steepening stateside in which T-notes tested 130.00 to the downside and following a somewhat tepid US 10yr offering in which the b/c increased from prior but remained short of the six-auction average, while the results of the 5yr JGB auction were mixed and failed to spur prices with higher accepted prices offset by a weaker b/c. Top Asian News Evergrande Declared in Default as Massive Restructuring Looms China Dollar Junk Bonds Up After Fitch Move on Kaisa, Evergrande Gold Steady as Traders Assess Virus Risk Before Inflation Data China’s Credit Growth Rebounds After Slowing for Almost a Year Stocks in Europe trade have drifted lower in recent trade, giving up the modest gains seen at the open (Euro Stoxx 50 -0.5%, Stoxx 600 -0.2%), and following the mixed lead from APAC and amidst a lack of fresh fundamental catalysts. US equity futures are also subdued, with a relatively broad-based performance seen across the ES (-0.3%), NQ (-0.4%), YM (-0.3%) alongside some mild underperformance in the RTY (-0.6%). Markets are awaiting tomorrow’s US CPI metrics, but more importantly, are gearing up for next week’s blockbuster FOMC confab. Desks have attributed this week’s rebound to several factors working in unison, including a milder Omicron variant (thus far), Chinese policy easing, FOMO, buybacks/upbeat corporate commentary alongside the widely telegraphed hawkish Fed pivot. On the last note, it’s also worth keeping in mind that the rotating voters next year on the FOMC will be more hawkish with the addition of George, Mester and Bullard as voters, albeit some empty spots remain – namely Brainard’s spot as she takes over the Vice-Chair position. Back to Europe, sectors are mostly in the green but portray a defensive bias – with Healthcare, Telecoms, Food & Beverages and Personal & Household Goods at the top of the bunch, whilst Oil & Gas, Retail and Travel & Leisure resides on the other end of the spectrum. In terms of individual moves, UniCredit (+7.8%) shot up to the top of the Stoxx 600 after unveiling its 2024 targets – with the Co. looking to return at least EUR 16bln via dividend and buybacks between 2021-24. Sticking with banks, Deutsche Bank (-2.1%) is pressured after the US DoJ reportedly told Deutsche Bank it may have violated a criminal settlement, due to failures in alerting authorities about internal complaints at its asset management unit, according to sources. Elsewhere, AstraZeneca (+1.0%) is supported as its long-acting antibody combination received emergency use authorisation in the US for COVID-19 prevention in some individuals. Finally, Rolls-Royce (-3.7%) slipped despite an overall positive trading update. Top European News Rolls-Royce Sinks as Omicron Clouds Outlook for 2022 Comeback Harbour Energy Plans Dividend But Pushes Back Tolmount Again Toxic U.K. Tory Press Is Flashing Warning Sign for Boris Johnson Credit Suisse Chairman Horta-Osorio Broke Quarantine Rules In FX, the Greenback remains rangy amidst undulating US Treasury yields and a fluid flow of Omicron related headlines that are filling the void until this week’s main macro release arrives tomorrow in the form of CPI data. However, the index is drifting down in almost ever decreasing circles having retreated a bit further from peaks to a marginally deeper sub-96.000 trough on Wednesday, at 95.848, and forming a fractionally firmer base currently to stay within contact of the psychological level within a narrow 96.154-95.941 band, thus far. Ahead, latest jobless claims updates and the last refunding leg comprising Usd 22 bn long bonds after a reasonable 10 year outing, overall. CHF/EUR/CAD - No obvious reaction to Swiss SECO forecasts even though supply bottlenecks and stricter COVID-19 measures are putting a strain on the economy internationally in winter 2021/22, according to the Government affiliated body. Similarly, ECB sources reporting that views on the GC are converging on a limited, temporary increase of the APP at December’s policy meeting, via an envelope or time specified increase with more frequent reviews, hardly impacted the Euro, as Eur/Usd remained towards the bottom of a 1.1346-16 range and Usd/Chf continued to straddle 0.9200, albeit mostly on the weaker side. Meanwhile, the Loonie has also slipped to the back of the major ranks following yesterday’s largely non BoC event against the backdrop of softer crude prices and an indifferent risk tone, with Usd/Cad hovering mainly above 1.2650 between 1.2645-80 parameters. JPY/GBP/NZD/AUD - All sticking to tight confines against their US peer, as the Yen rotates around 113.50 again and Pound pivots 1.3200 in limbo awaiting top tier UK data on Friday that might shed more light on what is gearing up to be another tight BoE rate call next week. Moreover, Usd/Jpy looks pretty well and heavily flanked by option expiry interest either side and in between its 113.81-35 extremes given large amounts running off at the NY cut - see 6.59GMT post on the Headline Feed for full details. Elsewhere, the pendulum has swung down under in favour of the hitherto underperforming Kiwi, as Nzd/Usd popped over 0.6800 and Aud/Nzd stalled ahead of 1.0550 alongside a pull back in Aud/Usd from 0.7185+ at best to test support into 0.7150 in wake of comments by RBA’s Harker and the RBNZ rebalancing its TWI. In short, the former said Australia’s economy can run hot while dodging the runaway inflation that’s plaguing much of the world, signaling monetary policy will stay ultra-loose for some time yet, while the latter culminated in a bigger Cny contribution at 27% from 23.5%. SCANDI/EM - Another day and more appreciation for the Cnh and Cny, at least in early hours, with validation via the PBoC setting a sub-6.3500 midpoint fix for the onshore Yuan vs Buck. However, the offshore then re-weakened past 6.3500 per Dollar after the Chinese central bank opted to raise the FX RRR by 2ppts - effective 15th Dec. Meanwhile, the Nok gives back after midweek gains as Brent slips with WTI to the detriment of the Rub and Mxn as well. Conversely, the Huf has a further 20 bp 1 week repo hike from the NBH to lean on and the Brl got a boost from 150 bp tightening on top of the BCB signalling the same again when COPOM delivers its next SELIC rate call. In commodities, WTI and Brent front month futures have drifted lower from their best levels printed overnight, which saw WTI Jan briefly mount USD 73.00/bbl and Brent Feb eclipse 76.50/bbl. The complex was unfazed by WSJ source reports suggesting the Biden administration is said to be moving to tighten enforcement of sanctions against Iran, whilst US officials say if there is no progress in the nuclear talks. This comes ahead of the resumption of nuclear talks today, albeit the US delegation will only travel to Vienne over the weekend. With the likelihood of an imminent deal somewhat slim, participants will be eyeing any further deterioration in relations alongside additional demand/sanctions. Aside from that, price action will likely be dictated by the overall market tone in the absence of macro catalysts. Elsewhere, reports suggested the Marathon pipeline has been shut due to a crude oil leak estimated to be around 10 barrels from the 20-inch diameter Illinois pipeline, but again the headlines failed to spur the oil complex. Over to metals, spot gold trades sideways and remains under that cluster of DMAs which today sees the 100 at 1,790/oz, 200 and 1,792.50/oz and 50 and 1,795/oz. LME copper meanwhile has been drifting lower since the end of APAC trade, but the contract remains north of USD 9,500/t. US Event Calendar 8:30am: Dec. Initial Jobless Claims, est. 220,000, prior 222,000; Continuing Claims, est. 1.91m, prior 1.96m 9:45am: Dec. Langer Consumer Comfort, prior 51.0 10am: Oct. Wholesale Inventories MoM, est. 2.2%, prior 2.2%; Wholesale Trade Sales MoM, est. 1.0%, prior 1.1% 12pm: 3Q US Household Change in Net Wor, prior $5.85t DB's Jim Reid concludes the overnight wrap On the theme of advertising, here’s a final reminder about our special monthly survey for 2022, which will be closing today at 1pm London time. We ask about rates, equities, and the path of Covid-19 in 2022, amongst other things, and also return to a festive question we asked in 2019, namely your favourite ever Christmas songs. The link is here and it’s your last chance to complete. All help filling in very much appreciated. Following the strongest 2-day equity performance so far this year, yesterday saw the rally begin to peter out amidst growing concern that another round of restrictions over the coming weeks could set back the economic recovery. Ultimately the issue from a health perspective is that even if Omicron does prove to be less severe, which the initial indications so far have pointed to, a rise in transmissibility could offset that, and ultimately mean that more people are in hospital as a much bigger number of people would actually get Covid-19, even if a lower proportion of them are severely affected. We’ll start with the good news, and one new piece of information yesterday was that Pfizer and BioNTech announced the results from an initial study showing that three doses of their vaccine neutralised the Omicron variant of Covid-19. President Biden tweeted that the new data was “encouraging” and said it reinforced the point that boosters offer the highest protection, whilst Pfizer’s chief executive said that the final verdict would be the real-world efficacy data, which they expect to see toward the end of this year. We also had an update from the EU’s ECDC, who said that of the 337 Omicron cases reported in the EU/EEA so far, all of them were either asymptomatic or mild where severity was available, and that no deaths had yet been reported. Obviously, these sample sizes aren’t big enough to come to concrete conclusions yet, but if things continue this way that’s clearly a promising sign. On the other hand, the spread of infections has continued in South Africa, and the country reported 19,482 cases, which is the highest number since Omicron was first reported. That comes as a study from a Japanese scientist advising the health ministry in Japan said that Omicron was 4.2 times more transmissible than delta in its early stage. That hasn’t been peer-reviewed yet but would certainly back up all the other indications that this is a much more transmissible variant than seen before. These growing warning signs have led governments to keep toughening up restrictions, and here in the UK, the government announced they’d be moving to “Plan B” in England, which will see the reintroduction of guidance to work from home from Monday, and an extension of face masks to most public indoor venues. They will also be making Covid-19 passes mandatory for nightclubs and venues with large crowds, though a negative test will also be sufficient. That comes as cases have continued to rise, with the 7-day average now above 48,000 and at its highest level since January. Separately in Denmark, the government said that schools would close early for the Christmas break, amongst other restrictions. Equities struggled against this backdrop, with Europe’s STOXX 600 down -0.59%, although the S&P 500 managed to pare back its earlier losses to eke out a +0.31% gain. Cyclicals underperformed, but we did see volatility continue to subside, with the VIX down to its lowest closing level since Omicron emerged, at 19.9pts. In addition, there was an outperformance from tech stocks, with the NASDAQ (+0.64%) and the FANG+ index (+0.62%) seeing solid gains. The increasing risk-off tone didn’t bother oil prices either, with Brent crude (+0.50%) and WTI (+0.43%) continuing their run of gains this week, including further gains overnight, whilst European natural gas futures (+5.86%) closed above €100 per megawatt-hour for the first time in nearly 2 months. Over in sovereign bond markets, yields moved higher on both sides of the Atlantic for the most part, with those on 10yr Treasuries up +4.8bps to 1.52%, though this morning they’re down by -1.2bps. That’s the first time they’ve closed back above 1.5% since the session just before Thanksgiving, ahead of the news emerging about the Omicron variant. In Europe, there was an even bigger sell-off, with yields on 10yr bunds (+6.3bps), OATs (+6.9bps) and BTPs (+10.4bps) all moving higher, alongside a further widening in peripheral spreads. This more mixed performance has continued overnight in Asia, with a number of indices trading higher including the CSI (+1.76%), the Shanghai Composite (+1.03%), Hang Seng (+0.89%), and the KOSPI (+0.37%). However, both the Nikkei (-0.27%) and Australia’s ASX 200 (-0.28%) lost ground. On the data front, China’s inflation numbers this morning showed that CPI rose to +2.3% year-on-year in November, slightly lower than forecast +2.5%, albeit still the highest since last August. The PPI readings remained much stronger, but did fall back from a 26-year high last month to +12.9% year-on-year (vs. +12.1% forecast). Looking ahead, futures are indicating a mixed start in the US & Europe with S&P 500 (-0.13%) and DAX (+0.12%) seeing modest moves in either direction. Overnight we also heard from President Biden on Russia, who said that he hoped to announce high-level talks by tomorrow where they would discuss Russian concerns about NATO, and that this would include at least four major NATO allies. President Biden said the meeting was an explicit attempt to “bring down the temperature along the eastern front” that’s ramped up over recent days and weeks. Nevertheless, President Biden reinforced that the US was ready to implement severe economic sanctions should Russia invade Ukraine, telling reporters that he said to Putin there would be “economic consequences like none he’s ever seen”. Back to yesterday, and the Bank of Canada kept policy on hold at their meeting, as was expected. The bank reinforced their expectation for the 2 percent inflation target to be sustainably achieved in the “middle quarters of 2022”. Like other DM central banks, they are focused on persistently elevated inflation, which they tied to supply constraints that will take some time to alleviate. We had some rate hikes elsewhere, however, yesterday with Brazil’s central bank taking rates up by 150bps to 9.25%, whilst Poland’s hiked rates by +50bps to 1.75%. The main data of note yesterday were the US job openings for October, which rose to 11.033m (vs. 10.469m expected) after 2 successive monthly declines. Notably the quits rate, which is a good indicator of labour market tightness, saw its first monthly decline since May as it came down to 2.8%, from an all-time record of 3.0%. To the day ahead now, and it’s a quiet one on the calendar, with data releases including the US weekly initial jobless claims, as well as the German trade balance for October. Tyler Durden Thu, 12/09/2021 - 07:55.....»»

Category: dealsSource: nytDec 9th, 2021

Futures Surge As Banks Report Stellar Earnings; PPI On Deck

Futures Surge As Banks Report Stellar Earnings; PPI On Deck US equity futures, already sharply higher overnight, jumped this morning as a risk-on mood inspired by stellar bank earnings, overshadowed concern that supply snarls. a China property crunch, a tapering Fed and stagflation will weigh on the global recovery. Nasdaq futures jumped 1%, just ahead of the S&P 500 which was up 0.9%. 10-year Treasury yields ticked lower to about 1.5%, and with the dollar lower as well, oil jumped. Bitcoin and the broader crypto space continued to rise. Shares in Morgan Stanley, Citi and Bank of America jumped as their deal-making units rode a record wave of M&A. On the other end, Boeing shares fell more than 1% after a Dow Jones report said the plane maker is dealing with a new defect on its 787 Dreamliner. Here are some of the biggest other U.S. movers today: Occidental (OXY US) rises 1.6% in U.S. premarket trading after it agreed to sell its interests in two Ghana offshore fields for $750m to Kosmos Energy and Ghana National Petroleum Plug Power (PLUG US) rises 3.3% premarket, extending gains from Wednesday, when it announced partnership with Airbus SE and Phillips 66 to find ways to harness hydrogen to power airplanes, vehicles and industry Esports Entertainment (GMBL US) shares rise 16% in U.S. premarket trading after the online gambling company reported its FY21 results and reaffirmed its FY22 guidance Perrigo  (PRGO US) gains 2.8% in premarket trading after Raymond James upgrades to outperform following acquisition of HRA Pharma and recent settlement of Irish tax dispute AT&T (T US) ticks higher in premarket trading after KeyBanc writes upgrades to sector weight from underweight, saying it seems harder to justify further downside from here Avis Budget (CAR US) may be active after getting its only negative rating among analysts as Morgan Stanley cuts to underweight with risk/reward seen pointing toward downside OrthoPediatrics (KIDS US) dipped 2% Wednesday postmarket after it said 3Q revenue was hurt by the surge in cases of Covid-19 delta variant and RSV within children’s hospitals combined with staff shortage Investors continue to evaluate the resilience of economic reopening to supply chain disruptions, a jump in energy prices and the prospect of reduced central bank support. In the earnings season so far, executives at S&P 500 companies mentioned the phrase “supply chain” about 3,000 times on investor calls as of Tuesday -- far higher than last year’s then-record figure. “Our constructive outlook for growth means that our asset allocation remains broadly pro-risk and we continue to be modestly overweight global equities,” according to Michael Grady, head of investment strategy and chief economist at Aviva Investors. “However, we have scaled back that position marginally because of growing pains which could impact sales and margins.” Europe's Stoxx 600 index reached its highest level in almost three weeks, boosted by gains in tech shares and miners. The Euro Stoxx 50 rose over 1% to best levels for the week. FTSE 100 rises 0.75%, underperforming at the margin. Miners and tech names are the strongest sectors with only healthcare stocks in small negative territory. Here are some of the biggest European movers today: THG shares advance as much as 10%, snapping a four-day losing streak, after a non-executive director bought stock while analysts at Goldman Sachs and Liberum defended their buy recommendations. Steico gains as much as 9.9%, the most since Jan., after the insulation manufacturer reported record quarterly revenue, which Warburg says “leaves no doubt” about underlying market momentum. Banco BPM climbs as much as 3.6% and is the day’s best performer on the FTSE MIB benchmark index; bank initiated at buy at Jefferies as broker says opportunity to internalize insurance business offers 9%-16% possible upside to 2023 consensus EPS and is not priced in by the market. Hays rises as much as 4.3% after the recruiter posted a jump in comparable net fees for the first quarter. Publicis jumps as much as 3.7%, the stock’s best day since July, with JPMorgan saying the advertising company’s results show a “strong” third quarter, though there are risks ahead. Kesko shares rise as much as 6.1%. The timing of this year’s third guidance upgrade was a surprise, Inderes says. Ubisoft shares fall as much as 5.5% after JPMorgan Cazenove (overweight) opened a negative catalyst watch, citing short-term downside risk to earnings ahead of results. Earlier in the session, Asian stocks advanced, boosted by a rebound in technology shares as traders focused on the ongoing earnings season and assessed economic-reopening prospects in the region. The MSCI Asia Pacific Index gained as much as 0.7%, as a sub-gauge of tech stocks rose, halting a three-day slide. Tokyo Electron contributed the most to the measure’s climb, while Taiwan Semiconductor Manufacturing Co. closed up 0.4% ahead of its earnings release. India’s tech stocks rose following better-than-expected earnings for three leading firms in the sector. Philippine stocks were among Asia’s best performers as Manila began easing virus restrictions, which will allow more businesses in the capital to reopen this weekend. Indonesia’s stock benchmark rallied for a third-straight day, as the government prepared to reopen Bali to tourists. READ: Commodities Boom, Tourism Hopes Fuel Southeast Asia Stock Rally Ilya Spivak, head of Greater Asia at DailyFX, said FOMC minutes released overnight provided Asian markets with little direction, which may offer some opportunity for recouping recent losses. The report showed officials broadly agreed last month they should start reducing pandemic-era stimulus in mid-November or mid-December. U.S. 10-year Treasury yields stayed below 1.6%, providing support for tech stocks.  “Markets seemed to conclude the near-term narrative is on pause until further evidence,” Spivak said. Shares in mainland China fell as the country reported factory-gate prices grew at the fastest pace in almost 26 years in September. Singapore’s stock benchmark pared initial losses as the country’s central bank unexpectedly tightened policy. Hong Kong’s equity market was closed for a holiday In rates, Treasuries were steady to a tad higher, underperforming Bunds which advanced, led by the long end.  Fixed income is mixed: gilts bull steepen with short dates richening ~2.5bps, offering only a muted reaction to dovish commentary from BOE’s Tenreyro. Bunds rise with 10y futures breaching 169. USTs are relatively quiet with 5s30s unable to crack 100bps to the upside. Peripheral spreads widen slightly. In FX, the Turkish lira was again the overnight standout as it weakened to a record low after President Recep Tayyip Erdogan fired three central bankers. The Bloomberg Dollar Spot Index fell and the greenback slipped against all of its Group-of-10 peers apart from the yen, with risk-sensitive and resource-based currencies leading gains; the euro rose to trade above $1.16 for the first time in a week.  The pound rose to more than a two-week high amid dollar weakness as traders wait for a raft of Bank of England policy makers to speak. Sweden’s krona temporarily came off an almost eight-month high against the euro after inflation fell short of estimates. The euro dropped to the lowest since November against the Swiss franc as banks targeted large option barriers and leveraged sell-stops under 1.0700, traders said; Currency traders are responding to stagflation risks by turning to the Swiss franc. The Aussie advanced to a five-week high versus the greenback even as a monthly jobs report showed employment fell in September; the jobless rate rose less than economists forecast. The kiwi was a among the top performers; RBNZ Deputy Governor Geoff Bascand said inflation pressures were becoming more persistent China’s yuan declined from a four-month high after the central bank signaled discomfort with recent gains by setting a weaker-than-expected reference rate. In commodities, crude futures extend Asia’s gains with WTI up ~$1 before stalling near $81.50. Brent regains a $84-handle. Spot gold drifts through Wednesday’s highs, adding $4 to print just shy of the $1,800/oz mark. Base metals are well bid with LME copper and aluminum gaining as much as 3%.  Looking at the day ahead, we’ve got central bank speakers including the Fed’s Bullard, Bostic, Barkin, Daly and Harker, the ECB’s Elderson and Knot, along with the BoE’s Deputy Governor Cunliffe, Tenreyro and Mann. Data releases from the US include the September PPI reading along with the weekly initial jobless claims. Lastly, earnings releases will include UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Market Snapshot S&P 500 futures up 0.6% to 4,382.50 STOXX Europe 600 up 0.9% to 464.38 MXAP up 0.7% to 196.12 MXAPJ up 0.6% to 642.66 Nikkei up 1.5% to 28,550.93 Topix up 0.7% to 1,986.97 Hang Seng Index down 1.4% to 24,962.59 Shanghai Composite little changed at 3,558.28 Sensex up 0.7% to 61,190.63 Australia S&P/ASX 200 up 0.5% to 7,311.73 Kospi up 1.5% to 2,988.64 Brent Futures up 1.0% to $83.98/bbl Gold spot up 0.2% to $1,796.13 U.S. Dollar Index down 0.25% to 93.84 German 10Y yield fell 1.5 bps to -0.143% Euro little changed at $1.1615 Brent Futures up 1.0% to $84.13/bbl Top Overnight News from Bloomberg A flattening Treasury yield curve signals increasing concern Federal Reserve efforts to keep inflation in check will derail the recovery in the world’s largest economy China’s factory-gate prices grew at the fastest pace in almost 26 years in September, potentially adding to global inflation pressure if local businesses start passing on higher costs to consumers. Turkish President Recep Tayyip Erdogan fired monetary policy makers wary of cutting interest rates further, driving the lira to record lows against the dollar with his midnight decree Singapore’s central bank unexpectedly tightened its monetary policy settings, strengthening the local dollar, as the city-state joins policymakers globally concerned about risks of persistent inflation Shortages of natural gas in Europe and Asia are boosting demand for oil, deepening what was already a sizable supply deficit in crude markets, the International Energy Agency said A tropical storm that’s lashing southern China mixed with Covid-related supply chain snarls is causing a ship backlog from Shenzhen to Singapore, intensifying fears retail shelves may look rather empty come Christmas A more detailed look at global markets courtesy of Newsquawk A constructive mood was seen across Asia-Pac stocks with the region building on the mild positive bias stateside where the Nasdaq outperformed as tech and growth stocks benefitted from the curve flattening, with global risk appetite unfazed by the firmer US CPI data and FOMC Minutes that suggested the start of tapering in either mid-November of mid-December. The ASX 200 (+0.5%) traded higher as tech stocks found inspiration from the outperformance of US counterparts and with the mining sector buoyed by gains in underlying commodity prices. The Nikkei 225 (+1.5%) was the biggest gainer amid currency-related tailwinds and with the latest securities flow data showing a substantial shift by foreign investors to net purchases of Japanese stocks during the prior week. The KOSPI (+1.5%) conformed to the brightening picture amid signs of a slowdown in weekly infections, while the Singapore’s Straits Times Index (+0.3%) lagged for most of the session following weaker than expected Q3 GDP data, and after the MAS surprisingly tightened its FX-based policy by slightly raising the slope of the SGD nominal effective exchange rate (NEER). The Shanghai Comp. (U/C) was initially kept afloat but with gains capped after slightly softer than expected loans and financing data from China and with participants digesting mixed inflation numbers in which CPI printed below estimates but PPI topped forecasts for a record increase in factory gate prices, while there was also an absence of Stock Connect flows with participants in Hong Kong away for holiday. Finally, 10yr JGBs were higher after the recent curve flattening stateside and rebound in T-notes with the US longer-end also helped by a solid 30yr auction, although gains for JGBs were capped amid the outperformance in Tokyo stocks and mostly weaker metrics at the 5yr JGB auction. Top Asian News Chinese Developer Shares Fall on Debt Crisis: Evergrande Update Japan’s Yamagiwa Says Abenomics Fell Short at Spreading Wealth China Seen Rolling Over Policy Loans to Keep Liquidity Abundant Malaysia’s 2020 Fertility Rate Falls to Lowest in Four Decades Bourses in Europe have modestly extended on the upside seen at the European cash open (Euro Stoxx 50 +1.1%; Stoxx 600 +0.9%) in a continuation of the firm sentiment experienced overnight. US equity futures have also conformed to the broader upbeat tone, with gains seen across the ES (+0.7%), NQ (+0.8%), RTY (+0.8%) and YM (+0.7%). The upside comes despite a lack of overly pertinent newsflow, with participants looking ahead to a plethora of central bank speakers. The major indices in Europe also see a broad-based performance, but the periphery narrowly outperforms, whilst the SMI (Unch) lags amid the sectorial underperformance seen in Healthcare. Overall, the sectors portray somewhat of a cyclical tilt. The Basic Resources sector is the clear winner and is closely followed by Tech and Financial Services. Individual moves are scarce as price action is largely dictated by the macro picture, but the tech sector is led higher by gains in chip names after the world's largest contract chipmaker TSMC (+3.1% pre-market) reported strong earnings and upgraded its revenue guidance. Top European News German 2021 Economic Growth Forecast Slashed on Supply Crunch U.K. Gas Shipper Stops Supplies in Another Blow to Power Firms Christmas Toy Shortages Loom as Cargo Clogs a Major U.K. Port Putin Is Back to Building Financial Fortress as Reserves Grow In FX, the Dollar and index by default have retreated further from Tuesday’s 2021 peak for the latter as US Treasury yields continue to soften and the curve realign in wake of yesterday’s broadly in line CPI data and FOMC minutes that set the schedule for tapering, but maintained a clear differential between scaling down the pace of asset purchases and the timing of rate normalisation. Hence, the Buck is losing bullish momentum with the DXY now eying bids and downside technical support under 94.000 having slipped beneath an early October low (93.804 from the 5th of the month vs 93.675 a day earlier) and the 21 DMA that comes in at 93.770 today between 94.090-93.754 parameters before the next IJC update, PPI data and a heavy slate of Fed speakers. NZD/AUD - No real surprise that the Kiwi has been given a new lease of life given that the RBNZ has already taken its first tightening step and put physical distance between the OCR and the US FFR, not to mention that the move sparked a major ‘sell fact’ after ‘buy rumour’ reaction. However, Nzd/Usd is back on the 0.7000 handle with additional impetus via favourable tailwinds down under as the Aud/Nzd cross is now nearer 1.0550 than 1.0600 even though the Aussie is also taking advantage of the Greenback’s fall from grace to reclaim 0.7400+ status. Note, Aud/Usd may be lagging somewhat on the back of a somewhat labour report overnight as the employment tally fell slightly short of expectations and participation dipped, but the jobless rate fell and full time jobs rose. Moreover, RBA Deputy Governor Debelle repeated that circumstances are different for Australia compared to countries where policy is tightening, adding that employment is positive overall, but there is not much improvement on the wage front. CAD/GBP/CHF - The next best majors in terms of reclaiming losses vs their US counterpart, with the Loonie also encouraged by a firm bounce in oil prices and other commodities in keeping with a general recovery in risk appetite. Usd/Cad is under 1.2400, while Cable is now over 1.3700 having clearly breached Fib resistance around 1.3663 and the Franc is probing 0.9200 for a big figure-plus turnaround from recent lows irrespective of mixed Swiss import and producer prices. EUR/JPY - Relative laggards, but the Euro has finally hurdled chart obstacles standing in the way of 1.1600 and gradually gathering impetus to pull away from decent option expiry interest at the round number and just above (1.5 bn and 1 bn 1.1610-20), and the Yen regrouping around the 113.50 axis regardless of dovish BoJ rhetoric. In short, board member Noguchi conceded that the Bank may have little choice but to extend pandemic relief support unless it becomes clear that the economy has returned to a pre-pandemic state, adding that more easing may be necessary if the jobs market does not improve from pent-up demand, though he doesn't see and immediate need to top up stimulus or big stagflation risk. In commodities, WTI and Brent front month futures are continuing the grind higher seen since the European close yesterday as the risk tone remains supportive and in the aftermath of an overall bullish IEA oil market report. The IEA upgraded its 2021 and 2022 oil demand forecasts by 170k and 210k BPD respectively, which contrasts the EIA STEO and the OPEC MOMR – with the former upping its 2021 but cutting 2022 forecast, whilst the OPEC MOMR saw the 2021 demand forecast cut and 2022 was maintained. The IEA report however noted that the ongoing energy crisis could boost oil demand by 500k BPD, and oil demand could exceed pre-pandemic levels in 2022. On this, China has asked Russia to double electricity supply between November-December. The morning saw commentary from various energy ministers, but perhaps the most telling from the Russian Deputy PM Novak who suggested Russia will produce 9.9mln BPD of oil in October (in-line with the quota), but that Russia has no problem in increasing oil output which can go to 11.3mln BPD (Russia’s capacity) and even more than that, but output will depend on market situation. Long story short, Russia can ramp up output but is currently caged by the OPEC+ pact. WTI Nov extended on gain about USD 81/bbl to a current high of USD 81.41/bbl (vs 80.41/bbl low) while its Brent counter topped USD 84.00/bbl to a USD 84.24/bbl high (vs 83.18/bbl low). As a reminder, the weekly DoEs will be released at 16:00BST/11:00EDT on account of the Columbus Day holiday. Gas prices have also moved higher in intraday, with the UK Nat Gas future +5.5% at the time of writing. Returning to the Russian Deputy PM Novak who noted that Nord Stream 2 will be ready for work in the next few days, still expects certification to occur and commercial supplies of gas via Nord Stream 2 could start following certification. Elsewhere, spot gold and silver have been drifting higher as the Buck wanes, with spot gold topping its 200 DMA (1,7995/oz) and in striking distance of its 100 DMA (1,799/oz) ahead of the USD 1,800/oz mark. Over to base metals, LME copper is again on a firmer footing, owing to the overall constructive tone across the market. Dalian iron ore meanwhile fell for a second straight day in a continuation of the downside seen as Beijing imposed tougher steel output controls for winter. World Steel Association also cut its global steel demand forecast to +4.5% in 2021 (prev. forecast +5.8%); +2.2% in 2022 (prev. forecast 2.7%). US Event Calendar 8:30am: Sept. PPI Final Demand MoM, est. 0.6%, prior 0.7%; YoY, est. 8.6%, prior 8.3% 8:30am: Sept. PPI Ex Food and Energy MoM, est. 0.5%, prior 0.6%; YoY, est. 7.1%, prior 6.7% 8:30am: Sept. PPI Ex Food, Energy, Trade MoM, est. 0.4%, prior 0.3%; YoY, est. 6.5%, prior 6.3% 8:30am: Oct. Initial Jobless Claims, est. 320,000, prior 326,000; Continuing Claims, est. 2.67m, prior 2.71m 9:45am: Oct. Langer Consumer Comfort, prior 53.4 Central Banks 8:35am: Fed’s Bullard Takes Part in Virtual Discussion 9:45am: Fed’s Bostic Takes Part in Panel on Inclusive Growth 12pm: New York Fed’s Logan Gives Speech on Policy Implementation 1pm: Fed’s Barkin Gives Speech 1pm: Fed’s Daly Speaks at Conference on Small Business Credit 6pm: Fed’s Harker Discusses the Economic Outlook DB's Jim Reid concludes the overnight wrap Inflation dominated the conversation yet again for markets yesterday, after another upside surprise from the US CPI data led to the increasing realisation that we’ll still be talking about the topic for some time yet. Equities were pretty subdued as they looked forward to the upcoming earnings season, but investor jitters were evident as the classic inflation hedge of gold (+1.87%) posted its strongest daily performance since March, whilst the US dollar (-0.46%) ended the session as the worst performer among the G10 currencies. Running through the details of that release, headline US consumer prices were up by +0.4% on a monthly basis in September (vs. +0.3% expected), marking the 5th time in the last 7 months that the figure has come in above the median estimate on Bloomberg, though core prices were in line with consensus at +0.2% month-over-month. There were a number of drivers behind the faster pace, but food inflation (+0.93%) saw its biggest monthly increase since April 2020. Whilst some pandemic-sensitive sectors registered soft readings, housing-related prices were much firmer. Rent of primary residence grew +0.45%, its fastest pace since May 2001 and owners’ equivalent rent increased +0.43%, its strongest since June 2006. These housing gauges are something that Fed officials have signposted as having the potential to provide more durable upward pressure on inflation. The CPI release only added to speculation that the Fed would be forced to hike rates earlier than previously anticipated, and investors are now pricing in almost 4 hikes by the end of 2023, which is over a full hike more than they were pricing in just a month earlier. In response, the Treasury yield curve continued the previous day’s flattening, with the prospect of tighter monetary policy seeing the 2yr yield up +2.0bps to a post-pandemic high of 0.358%, whilst the 10yr decreased -4.0bps to 1.537%. That move lower in the 10yr yield was entirely down to lower real rates, however, which were down -7.4bps, suggesting investors were increasingly concerned about long-term growth prospects, whereas the 10yr inflation breakeven was up +3.3bps to 2.525%, its highest level since May. Meanwhile in Europe, 10yr sovereign bond yields took a turn lower alongside Treasuries, with those on bunds (-4.2bps), OATs (-4.0bps) and BTPs (-2.3bps) all falling. Recent inflation dynamics and issues on the supply-side are something that politicians have become increasingly attuned to, and President Biden gave remarks last night where he outlined efforts to address the supply-chain bottlenecks. This followed headlines earlier in the session that major ports in southern California would move to a 24/7 schedule to unclog delivery backlogs, and Mr. Biden also used the opportunity to push for the passage of the infrastructure plan. That comes as it’s also been reported by Reuters that the White House has been speaking with US oil and gas producers to see how prices can be brought lower. We should hear from Mr. Biden again today, who’s due to give an update on the Covid-19 response. On the topic of institutions that care about inflation, the September FOMC minutes suggested staff still remained optimistic that inflationary pressures would prove transitory, although Committee members themselves were predictably more split on the matter. Several participants pointed out that pandemic-sensitive prices were driving most of the gains, while some expressed concerns that high rates of inflation would feed into longer-term inflation expectations. Otherwise, the minutes all but confirmed DB’s US economists’ call for a November taper announcement, with monthly reductions in the pace of asset purchases of $10 billion for Treasuries and $5 billion for MBS. Markets took the news in their stride immediately following the release, reflecting how the build-up to this move has been gradually telegraphed through the year. Turning to equities, the S&P 500 managed to end its 3-day losing streak, gaining +0.30% by the close. Megacap technology stocks led the way, with the FANG+ index up +1.13% as the NASDAQ added +0.73%. On the other hand, cyclicals such as financials (-0.64%) lagged behind the broader index following flatter yield curve, and JPMorgan Chase (-2.64%) sold off as the company’s Q3 earnings release showed muted loan growth. Separately, Delta Air Lines (-5.76%) also sold off along with the broader S&P 500 airlines index (-3.51%), as they warned that rising fuel costs would threaten earnings over the current quarter. European indices posted a more solid performance than the US, with the STOXX 600 up +0.71%, though the sectoral balance was similar with tech stocks outperforming whilst the STOXX Banks index (-2.05%) fell back from its 2-year high the previous session. Overnight in Asia equities have put in a mixed performance, with the KOSPI (+1.17%) and the Nikkei (+1.01%) moving higher whilst the Shanghai Composite (-0.25%) and the CSI (-0.62%) have lost ground. Those moves follow the release of Chinese inflation data for September, which showed producer price inflation hit its highest in nearly 26 years, at +10.7% (vs. +10.5% expected), driven mostly by higher coal prices and energy-sensitive categories. On the other hand, the CPI measure for September came in slightly below consensus at +0.7% (vs. +0.8% expected), indicating that higher factory gate prices have not yet translated into consumer prices. Meanwhile, equity markets in the US are pointing to a positive start later on with S&P 500 futures up +0.32%. Of course, one of the drivers behind the renewal of inflation jitters has been the recent surge in commodity prices across the board, and we’ve seen further gains yesterday and this morning that will only add to the concerns about inflation readings yet to come. Oil prices have advanced yet again, with Brent Crude up +0.69% this morning to be on track to close at a 3-year high as it stands. That comes in spite of OPEC’s monthly oil market report revising down their forecast for world oil demand this year to 5.8mb/d, having been at 5.96mb/d last month. Elsewhere, European natural gas prices were up +9.24% as they continued to pare back some of the declines from last week, and a further two energy suppliers in the UK collapsed, Pure Planet and Colorado Energy, who supply quarter of a million customers between them. Otherwise, copper (+4.4x%) hit a 2-month high yesterday, and it up a further +1.01% this morning, Turning to Brexit, yesterday saw the European Commission put forward a set of adjustments to the Northern Ireland Protocol, which is a part of the Brexit deal that’s caused a significant dispute between the UK and the EU. The proposals from Commission Vice President Šefčovič would see an 80% reduction in checks on animal and plant-based products, as well as a 50% reduction in paperwork by reducing the documentation needed for goods moving between Great Britain and Northern Ireland. It follows a speech by the UK’s David Frost on Tuesday, in which he said that Article 16 of the Protocol, which allows either side to take unilateral safeguard measures, could be used “if necessary”. Mr. Frost is due to meet with Šefčovič in Brussels tomorrow. Running through yesterday’s other data, UK GDP grew by +0.4% in August (vs. +0.5% expected), and the July number was revised down to show a -0.1% contraction (vs. +0.1% growth previously). The release means that GDP in August was still -0.8% beneath its pre-pandemic level back in February 2020. To the day ahead now, and on the calendar we’ve got central bank speakers including the Fed’s Bullard, Bostic, Barkin, Daly and Harker, the ECB’s Elderson and Knot, along with the BoE’s Deputy Governor Cunliffe, Tenreyro and Mann. Data releases from the US include the September PPI reading along with the weekly initial jobless claims. Lastly, earnings releases will include UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Tyler Durden Thu, 10/14/2021 - 08:29.....»»

Category: blogSource: zerohedgeOct 14th, 2021

NASDAQ Jumps 2% as Tech Makes a Comeback

NASDAQ Jumps 2% as Tech Makes a Comeback SPECIAL ALERT: The November episode of the Zacks Ultimate Strategy Session is now available for viewing! Tune in to this "must-see" event when Kevin Matras, Dr. John Blank, David Bartosiak and Sheraz Mian discuss the investment landscape from several angles. Don't miss your chance to hear: ▪ Sheraz and David Agree to Disagree on the sectors best positioned to perform in 2021 and beyond ▪ Kevin discusses what investors should do now that the election is over in Zacks Mailbag ▪ Sheraz and John choose one portfolio to give feedback for improvement ▪ And much more Simply log on to Zacks.com and view the November episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com. The NASDAQ recouped most of its recent losses on Wednesday, as the two-day rotation out of tech paused and the Dow finally took a break. The market has been a different place since news of a vaccine that’s reportedly more than 90% effective at preventing covid. Money surged into recovery names on Monday and Tuesday. But you can’t keep tech down for long! The NASDAQ jumped 2.01% (or about 232 points) on Wednesday to 11,786.43. The index had lost nearly 3% in the previous two sessions, so it got about two-thirds of the way back. The FAANGs were all higher, led by more than 3% advances for Apple (AAPL) and Amazon (AMZN) each. Netflix (NFLX) increased more than 2% and Facebook (FB) rose 1.5%. The S&P was up 0.77% to 3572.66, but the Dow declined 0.08% (or around 23 points) to 29,397.63.   The loss ended a two-day winning run for the Dow, which may not seem too impressive until you realize that it soared just under 1100 points in those two days. The market was so impressed with the vaccine news that it focused on names set to take off once we get back to normal, such as airlines, cruise companies, hotels, etc. However, we’re not back to normal just yet. In fact, we’re still dealing with rising coronavirus cases and the threat of lockdowns. Meanwhile, you know what’s taken a backseat amid all the vaccine hopes and election results? Earnings season! And that’s too bad, because its been a pretty good ride. More than 90% of S&P companies have reported Q3 results. Over 84% of them beat earnings expectations, while more than 75% topped revenue estimates. “The earnings outlook has been steadily improving since early July, as the U.S. economy started coming out of the pandemic-driven slump,” said Sheraz Mian in his Earnings Trends article posted today.   “While pockets of entrenched weakness remain, the pace and magnitude of the recovery has largely been better than expected.” Make sure to read his complete article titled: “Handicapping the Improving Earnings Picture”.  Today's Portfolio Highlights: Options Trader: In addition to beating earnings by 20% in its most recent report. Arthur J. Gallagher (AJG) has also broken out of a bullish consolidation pattern. Kevin expects more upside to come from this Zacks Rank #1 (Strong Buy) provider of insurance brokerage, consulting services, and third-party claims settlement and administration services. On Wednesday, the editor bought to open two April 120.00 Calls. Get more specifics in the full write-up.  Home Run Investor: Stocks in the building products space continue to move higher, so that’s where Brian went for today’s addition. The editor picked up Construction Partners (ROAD), an infrastructure & road construction company that beat the Zacks Consensus Estimate by 25% in its most recent report. Rising earnings estimates have made the stock a Zacks Rank #2 (Buy). If ROAD can keep the earnings momentum going, Brian thinks the stock could move a lot higher. Meanwhile, the portfolio also sold Brown & Brown (BRO, +3.8%) and Meridian Bioscience (VIVO) on Wednesday. Read the full write-up for more on all of today’s moves. Surprise Trader: Earnings estimates for Teekay LNG Partners (TGP) are on the rise, but the stock has been giving up ground. Dave doesn’t mind such a divergence, since it gives the share price plenty of running room moving forward. The company has a positive Earnings ESP of 10.71% for the quarter coming before the bell tomorrow, which makes this one of the editor’s “quick turnaround” ideas. He also appreciates that the company is a big dividend payer with a yield over 8%. The portfolio added TGP on Wednesday with a 12.5% allocation, while also getting out of Wolverine World Wide (WWW). The complete commentary has more on today’s action.   Commodity Innovators: With the market rallying sharply so far in November, Jeremy sees the potential for pullbacks in certain areas. Therefore, he took profits in three names on Wednesday. The biggest winner was premier specialty chemicals provider Albemarle Corporation (ALB), which ran beyond the portfolio’s targets. It was sold today for a 26.7% return in a little over two months. The editor would be willing to re-enter on any pullbacks. The other sells on Wednesday were Teucrium Soybean ETF (SOYB) for a 10% return in about six weeks and iShares Silver Trust (SLV) for a 5.8% profit in approximately the same amount of time. Read more in the full write-up. Until Tomorrow, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

SOUTHWEST AIRLINES REPORTS FOURTH QUARTER AND FULL YEAR 2022 RESULTS

DALLAS, Jan. 26, 2023 /PRNewswire/ -- Southwest Airlines Co. (NYSE:LUV) (the "Company") today reported its fourth quarter and full year 2022 financial results: Fourth quarter net loss of $220 million, or $0.37 loss per diluted share Fourth quarter net loss, excluding special items1, of $226 million, or $0.38 loss per diluted share Full year net income of $539 million, or $0.87 per diluted share Full year net income, excluding special items, of $723 million, or $1.16 per diluted share Record fourth quarter and full year operating revenues of $6.2 billion and $23.8 billion, respectively Liquidity2 of $13.3 billion, well in excess of debt outstanding of $8.1 billion Bob Jordan, President and Chief Executive Officer, stated, "Due to the operational disruptions in late December, which resulted in more than 16,700 flight cancellations, we incurred a fourth quarter pre-tax negative impact of approximately $800 million (or approximately $620 million on an after-tax basis), which resulted in a fourth quarter 2022 net loss. Despite the negative financial impacts in first quarter 2022 due to the Omicron variant and in fourth quarter 2022 due to the operational disruptions, we generated full year 2022 net income, excluding special items, of $723 million. "With regard to the operational disruptions, I am deeply sorry for the impact to our Employees and Customers. We have swiftly taken steps to bolster our operational resilience and are undergoing a detailed review of the December events. In addition, our Board of Directors has established an Operations Review Committee that is working with the Company's Management to help oversee the Company's response. As part of our efforts, we are also conducting a third-party review of the December events and are reexamining the priority of technology and other investments planned in 2023. "Based on current revenue and cost trends, we currently expect a first quarter 2023 net loss. However, we are encouraged by current booking trends in March 2023. Our 2023 plan continues to support solid profits with year-over-year margin expansion for full year 2023. We remain intent on achieving the long-term financial goals outlined at our December 2022 Investor Day. We also intend to regain our 51-year reputation for operational excellence. As ever, I am grateful for our Employees and their resilience and steadfast focus on Safety, Customer Service, and Teamwork. They remain the heart and soul of Southwest Airlines." Guidance and Outlook The following tables introduce or update selected financial guidance for first quarter and full year 2023, as applicable: 1Q 2023 Estimation Previous estimation Operating revenue, year-over-year Up 20% to 24% Not provided ASMs (a), year-over-year Up ~10% No change Economic fuel costs per gallon1,3 $3.25 to $3.35 $3.00 to $3.10 Fuel hedging premium expense per gallon $0.06 No change Fuel hedging cash settlement gains per gallon $0.16 No change ASMs per gallon (fuel efficiency) 78 to 80 Not provided CASM-X (b), year-over-year4 Up 2% to 4% Flat to up 2% Scheduled debt repayments (millions) (c) ~$60 ~$20 Interest expense (millions) ~$65 No change  2023 Estimation Previous estimation ASMs, year-over-year Up 16% to 17% Up ~15% Economic fuel costs per gallon1,3 $2.90 to $3.00 $2.85 to $2.95 Fuel hedging premium expense per gallon $0.06 No change Fuel hedging cash settlement gains per gallon $0.14 $0.13 CASM-X, year-over-year4 Down 6% to 8% Down 1% to 3% Scheduled debt repayments (millions) (c) ~$85 ~$80 Interest expense (millions) ~$250 No change Aircraft (d) 843 841 Effective tax rate 23% to 24% Not provided Capital spending (billions) (e) $4.0 to $4.5 No change (a) Available seat miles (ASMs, or capacity). The Company's flight schedule is currently published for sale through August 14, 2023. The Company continues to expect second quarter 2023 capacity to increase approximately 14 percent, year-over-year. (b) Operating expenses per available seat mile, excluding fuel and oil expense, special items, and profitsharing. (c) The Company expects to retire approximately $50 million in principal related to a lease buyout transaction in first quarter 2023, shifting this payment forward from the previous monthly payments scheduled throughout the remainder of 2023 and beyond. Combined with the retirement of $191 million in principal related to a lease buyout transaction in fourth quarter 2022, the Company's full year 2023 scheduled debt repayments remained roughly the same as its previous guidance. (d) Aircraft on property, end of period. The Company ended 2022 with 770 Boeing 737 aircraft. The Company continues to estimate approximately 100 Boeing 737 aircraft deliveries in 2023, including 30 737-8 (-8) aircraft deliveries expected in first quarter 2023. The Company continues to expect to retire 27 737-700 (-700) aircraft in 2023, including 5 -700 retirements in first quarter 2023. As a result of receiving two additional -8 deliveries in fourth quarter 2022, as compared with the Company's previous estimation, the Company now expects to end 2023 with 843 aircraft, compared with its previous guidance of 841 aircraft. The delivery schedule for the 737-7 (-7) is dependent on the Federal Aviation Administration (FAA) issuing required certifications and approvals to The Boeing Company (Boeing) and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct. (e) Represents the Company's current estimate, which continues to assume approximately 100 737 aircraft deliveries and $1.2 billion in non-aircraft capital spending in 2023.   Revenue Results and Outlook: Record fourth quarter 2022 operating revenues of $6.2 billion, a 7.7 percent increase compared with fourth quarter 2019 Record full year 2022 operating revenues of $23.8 billion, a 6.2 percent increase compared with full year 2019 Fourth quarter 2022 operating revenues per available seat mile (RASM, or unit revenues) increased 14.9 percent driven primarily by record fourth quarter passenger yields, which increased 10.6 percent, coupled with a load factor increase of 0.4 points, all compared with fourth quarter 2019 Fourth quarter 2022 managed business revenues were down 20 percent compared with fourth quarter 2019 While the Company's fourth quarter 2022 operating revenues were negatively impacted by approximately $410 million due to the flight cancellations in December, the Company's revenue performance leading up to the operational disruptions was strong and trending in line with previous guidance. Despite the flight cancellations, the Company had record fourth quarter operating revenues. As expected, fourth quarter 2022 managed business revenues remained below 2019 levels. The Company experienced sequential improvement from October to November, resulting in fourth quarter 2022 managed business revenues down 20 percent, compared with fourth quarter 2019, in line with previous guidance. In addition, the Company's fourth quarter 2022 operating revenues benefited from its loyalty program, including elevated point redemptions for flights and incremental revenue from its co-brand credit card agreement, as well as a continuation of increased take-rates for Upgraded Boarding following the digital self-service launch in August 2022. Thus far in January 2023, the Company has experienced an increase in flight cancellations and a deceleration in bookings, primarily for January and February 2023 travel, which are assumed to be associated with the operational disruptions in December 2022. As a result, the Company currently estimates a negative revenue impact in the range of $300 million to $350 million in first quarter 2023. Encouragingly, booking trends have improved sequentially this month, including notable strength in Rapid Rewards® redemptions. Currently, March 2023 leisure booking and yield trends appear strong, and are trending in line with the Company's expectations at the time of its Investor Day in early December 2022. The recent improvements in close-in booking trends are encouraging, and the Company currently expects March 2023 managed business revenues to be roughly restored to March 2019 levels. Fuel Costs and Outlook: Fourth quarter 2022 fuel costs were $3.18 per gallon1—in line with previous guidance—and included $0.03 per gallon in premium expense and $0.35 per gallon in favorable cash settlements from fuel derivative contracts Full year 2022 fuel costs were $3.07 per gallon1—in line with previous guidance—and included $0.04 per gallon in premium expense and $0.49 per gallon in favorable cash settlements from fuel derivative contracts Fourth quarter 2022 fuel efficiency improved 2.0 percent compared with fourth quarter 2019 due to more Boeing 737-8 aircraft, the Company's most fuel-efficient aircraft, as a percentage of its total fleet As of January 20, 2023, the fair market value of the Company's fuel derivative contracts settling in 2023 and 2024 was an asset of $561 million The Company's multi-year fuel hedging program continues to provide insurance against spikes in energy prices and significantly offset the market price increase, year-over-year, in jet fuel in fourth quarter and full year 2022. The Company's current fuel derivative contracts contain a combination of instruments based in West Texas Intermediate and Brent crude oil. The economic fuel price per gallon sensitivities3 provided in the table below assume the relationship between Brent crude oil and refined products based on market prices as of January 20, 2023. Estimated economic fuel price per gallon,including taxes and fuel hedging premiums Average Brent Crude Oilprice per barrel 1Q 2023 2023 $60 $2.45 to $2.55 $2.20 to $2.30 $70 $2.80 to $2.90 $2.50 to $2.60 $80 $3.10 to $3.20 $2.80 to $2.90 Current Market (a) $3.25 to $3.35 $2.90 to $3.00 $90 $3.40 to $3.50 $3.05 to $3.15 $100 $3.65 to $3.75 $3.35 to $3.45 $110 $3.90 to $4.00 $3.60 to $3.70 Fair market value $80 million $363 million Estimated premium costs $30 million $121 million (a) Brent crude oil average market prices as of January 20, 2023, were $87 and $85 per barrel for first quarter and full year 2023, respectively.    In addition, the Company is providing its maximum percentage of estimated fuel consumption5 covered by fuel derivative contracts in the following table:  Period  Maximum fuel hedged percentage (a) 2023 50 % 2024 39 % (a) Based on the Company's current available seat mile plans. The Company is currently 56 percent hedged in first quarter 2023, 51 percent hedged in second quarter 2023, and 47 percent hedged in second half 2023.   Non-Fuel Costs and Outlook: Fourth quarter 2022 operating expenses of $6.6 billion, a 29.5 percent increase compared with fourth quarter 2019 Fourth quarter 2022 operating expenses, excluding fuel and oil expense, special items, and profitsharing, increased 35.9 percent compared with fourth quarter 2019 Fourth quarter 2022 CASM-X increased 44.9 percent compared with fourth quarter 2019 Full year 2022 CASM-X increased 22.1 percent compared with full year 2019 Accrued $127 million of profitsharing expense for 2022 for the benefit of Employees The significant increase in fourth quarter 2022 CASM-X, compared with fourth quarter 2019, was largely due to the negative financial impacts of the December 2022 operational disruptions. The Company incurred a net increase of approximately $390 million in operating expenses due to the December 2022 operational disruptions—an additional 23-point CASM-X growth headwind compared with fourth quarter 2019. The majority of the 23-point CASM-X increase was due to travel expense reimbursements to Customers and the estimated value of Rapid Rewards® points offered as a gesture of goodwill to Customers and that are expected to be redeemed, with the remainder of the increase driven primarily by premium pay and additional compensation for Employees. Excluding the impact from the operational disruptions, the Company's fourth quarter 2022 CASM-X growth rate was trending roughly 4 points higher than the high end of its previous guidance range of up 14 percent to 18 percent, compared with fourth quarter 2019, primarily due to an increase in labor accruals for the Company's open labor contracts. The Company continues to monitor relative market compensation to evaluate its labor accruals in an effort to provide competitive market-based compensation packages for its Employees. The Company continues to experience year-over-year inflationary and other cost pressures in first quarter 2023, in particular from higher labor rates and accruals for all Employee work groups, as well as higher rate estimates for benefits and airport costs. The Company currently expects its first quarter 2023 CASM-X to increase in the range of 2 percent to 4 percent, year-over-year—approximately two points higher than its previous guidance of flat to up 2 percent, year-over year. Half of the two-point increase is attributable to a continuation of premium pay in January 2023 related to the December 2022 operational disruptions, and the remainder of the increase is primarily due to an increase in labor accruals for the Company's open labor contracts. The Company currently expects its full year 2023 CASM-X to decrease in the range of 6 percent to 8 percent, year-over-year—approximately five points lower than its previous guidance to decrease in the range of 1 percent to 3 percent, year-over-year. The vast majority of the five-point decrease in 2023 is due to the year-over-year impact from lower fourth quarter 2022 available seat miles and higher fourth quarter 2022 operating expenses than expected—both attributable to the December 2022 operational disruptions—offset slightly by an increase in 2023 labor accruals for the Company's open labor contracts. The Company plans to hire more than 7,000 new Employees, net of attrition, in 2023, a nearly 40 percent decrease from 2022 net hiring levels. Fourth quarter 2022 net interest expense, which is included in Other expenses, decreased $163 million, year-over-year, primarily due to a $109 million year-over-year increase in interest income driven primarily by higher interest rates, coupled with a $55 million year-over-year decrease in interest expense primarily due to various debt repurchases and repayments throughout 2022, as well as elimination of the debt discount as a result of the Company's adoption of Accounting Standards Update (ASU) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. Capacity, Fleet, and Capital Spending: The Company's full year 2022 capacity decreased 5.6 percent, compared with full year 2019, which was roughly one point lower than previous guidance of down 4.5 percent, due to flight cancellations from the December 2022 operational disruptions. Prior to the operational disruptions, the Company expected its 2023 capacity to increase approximately 15 percent, year-over-year. The Company's 2023 capacity growth plans currently remain unchanged. However, as a result of lower capacity in 2022, the Company's 2023 capacity is expected to increase in the range of 16 percent to 17 percent, year-over-year. As previously indicated, nearly all planned 2023 capacity additions will go to restoring the network and adding breadth and depth in existing Southwest markets. The Company received 33 Boeing 737-8 aircraft during fourth quarter 2022, including two additional -8 aircraft deliveries than previously planned, for a total of 68 -8 aircraft deliveries in 2022, compared with previous guidance of 66. The Company ended 2022 with 770 aircraft, which reflects 26 -700 aircraft retirements, including five retirements in fourth quarter. Due to Boeing's supply chain challenges and the current status of the -7 certification, the Company did not receive all 114 contractually scheduled 737 deliveries in 2022. The Company expects the remaining 46 contractual undelivered aircraft to shift into future years. Based on continued discussions with Boeing regarding the pace of expected deliveries, the Company continues to estimate it will receive approximately 100 737 aircraft deliveries in 2023, which differs from its contractual order book displayed in the table below. During first quarter 2023, the Company expects to receive approximately 30 -8 aircraft deliveries. The Company continues to expect to retire 27 -700 aircraft in 2023, including five -700 retirements in first quarter. As a result of the two additional -8 deliveries in fourth quarter 2022, the Company now expects to end 2023 with 843 aircraft, compared with its previous guidance of 841 aircraft. The Company's full year 2022 capital expenditures were $3.9 billion, relatively in line with the Company's guidance of $4.0 billion. The Company continues to estimate its 2023 capital spending to be in the range of $4.0 billion to $4.5 billion, which assumes approximately 100 737 aircraft deliveries in 2023. The Company's 2023 capital spending guidance continues to include approximately $1.2 billion in non-aircraft capital spending. Including both capital spending and operating expense budgets, the Company currently expects to spend approximately $1.3 billion in 2023 on technology investments, upgrades, and system maintenance. Since the Company's previous Investor Day disclosure on December 7, 2022, the Company converted four 2023 -7 firm orders to -8 firm orders in fourth quarter 2022. Additionally, in January 2023, the Company exercised 10 -7 options for delivery in 2024. The following tables provide further information regarding the Company's contractual order book and compare its contractual order book as of January 26, 2023, with its previous order book as of December 7, 2022. For purposes of the delivery schedule below, the Company has included the remaining 46 of its 2022 contractual undelivered aircraft (14 -7s and 32 -8s) within its 2023 contractual commitments. Given current supply chain and aircraft delivery delays, the Company will continue working with Boeing to solidify future delivery dates. Current 737 Contractual Order Book as of January 26, 2023: The Boeing Company -7 Firm Orders -8 Firm Orders -7 or -8 Options Total 2023 31 105 — 136 (c) 2024 51 — 35 86 2025 30 — 56 86 2026 30 15 40 85 2027 15 15 6 36 2028 15 15 — 30 2029 20 30 — 50 2030 — 55 — 55 2031 — — — — 192 (a) 235 (b) 137 564 (a) The delivery timing for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct. (b) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract. (c) The Company has included the remaining 46 of its 2022 contractual undelivered aircraft (14 -7s and 32 -8s) within its 2023 contractual commitments. Due to Boeing's supply chain challenges and the current status of the -7 certification, the Company currently estimates approximately 100 737 aircraft deliveries in 2023. The 2023 contractual detail is as follows: The Boeing Company -7Firm Orders -8Firm Orders Total 2022 Contractual Deliveries Remaining 14 32 46 2023 Contractual Deliveries 17 73 90 2023 Contractual Total 31 105 136   Previous 737 Contractual Order Book as of December 7, 2022 (a):  The Boeing Company -7 Firm Orders -8 Firm Orders -7 or -8 Options Total 2022 14 100 — 114 2023 21 69 — 90 2024 41 — 45 86 2025 30 — 56 86 2026 30 15 40 85 2027 15 15 6 36 2028 15 15 — 30 2029 20 30 — 50 2030 — 55 — 55 2031 — — — — 186 299 147 632 (a) The 'Previous 737 Contractual Order Book' is for reference and comparative purposes only. It should no longer be relied upon. See 'Current 737 Contractual Order Book' for the Company's current aircraft order book.   Liquidity and Capital Deployment: The Company ended 2022 with $12.3 billion in cash and short-term investments and a fully available revolving credit line of $1.0 billion The Company had a net cash position6 of $4.2 billion, and adjusted debt7 to invested capital8 (leverage)9 of 47 percent as of December 31, 2022 The Company paid $611 million during fourth quarter 2022 to retire debt and finance lease obligations, including the maturity of its 2.75% $300 million Notes due November 2022; the retirement of $191 million in principal related to a lease buyout transaction; the extinguishment of $103 million in principal of various unsecured notes for a cash payment of $104 million; and $16 million in scheduled debt payments The Company paid $3.1 billion during full year 2022 to retire a total of $2.9 billion in principal of debt and finance lease obligations, compared with its previous guidance of $2.6 billion, due to the early repayment of fourth quarter 2022 extinguishments noted above Awards and Recognitions: Named to FORTUNE's list of World's Most Admired Companies for 2022; ranked #28 #1 Marketing Carrier in Customer Satisfaction per the U.S. Department of Transportation10 Named Loyalty Program of the Year for Rapid Rewards Program and recognized for providing the Best Loyalty Credit Card by the 2022 Freddie Awards; Received the 2022 Freddie Awards title of Best Customer Service Named the top domestic airline for customer service by the 2022 Elliot Readers' Choice Customer Service Awards Named a Top 100 Company in 2022 by BetterInvesting Magazine Ranked #2 in the Best Airlines for 2022 list by The Points Guy Named to Glassdoor's Best Places to Work list in 2022 for the 13th consecutive year Named to the Best Employers for Diversity 2022 list by Forbes Designated a 2022 Military Friendly Company by Viqtory Named as A Best Place To Work For LGBTQ+ Equality in 2022 from the Human Rights Campaign Foundation Designated one of the Best Companies for Latinos to Work 2022 by Latino Leaders Magazine Named a Best Place to Work for Disability Inclusion after achieving a top score on Disability:IN's 2022 Disability Equality Index Environmental, Social, and Governance (ESG): Published the Company's annual integrated corporate social responsibility and environmental sustainability report—the Southwest Airlines One Report—a comprehensive, integrated report that includes information on the Company's Citizenship efforts and key topics including People, Performance, and Planet, along with reporting guided by the Global Reporting Initiatives (GRI) Standards, Sustainability Accounting Standards Board (SASB), and United Nations Sustainable Development Goals (UNSDG) frameworks Published the Southwest Airlines Diversity, Equity, & Inclusion Report (DEI), a companion piece to the One Report. This comprehensive report is focused on the Company's current DEI priorities and path forward Published an Environmental Policy Statement to guide the Company's meaningful steps to address its environmental impact Announced an investment into SAFFiRE Renewables, LLC (SAFFiRE), a company formed by D3MAX, LLC, as part of a Department of Energy (DOE) backed project to develop and produce scalable sustainable aviation fuel (SAF). Funded with a DOE grant matched by the Company's investment, SAFFiRE is expected to utilize technology developed by the DOE's National Renewable Energy Laboratory to convert corn stover, a widely available feedstock in the U.S., into renewable ethanol that then would be upgraded into SAF Brought sustainable aviation fuel (SAF) to Oakland International Airport (OAK) in August 2022—the first airline to bring SAF to OAK Launched additional opportunities for Southwest® Business Customers to support and advance sustainability initiatives within their corporate travel portfolios Reached agreement with 4AIR to offer corporate Customers participating in the Company's SAF Beta Program with independently verified assurance for the Scope 3 emission reduction rights associated with their support of expanding SAF in the Company's operations Joined forces with academic, technology, and nonprofit partners to launch the Contrail Impact Task Force. The cross-sectoral task force was established to explore the formation and mitigation of persistent condensation trails, or "contrails," that might affect the climate impact of some flights Purchased offsets equivalent to the carbon emissions generated by the Company's Employee business11 and charitable12 travel for 202113 Expanded the Company's Repurpose with Purpose program to include a new partner—the Tropical Agricultural and Higher Education Center (CATIE). CATIE aims to promote a route to achieve Inclusive Green Development, through the construction of human capital, and institutional strengthening for research, development, and external projection Donated more than $4 million in transportation to 76 grant recipients through the carrier's Medical Transportation Grant Program Announced Angelo State University (ASU) and Texas Southern University (TSU) as university partners in the airline's First Officer development and recruitment program: Destination 225°. ASU is a Hispanic-Serving Institution in San Angelo, Texas, and TSU is the first Historically Black College or University (HBCU) to join Destination 225° which provides a pathway for qualified collegiate aviators to join the Southwest Team as professional Pilots. In addition, announced Advanced Airlines and SkyWest Airlines as Destination 225° program partners The 2022-2023 school year marks the 25th anniversary of the Southwest Airlines Adopt-A-Pilot program, which has inspired thousands of fifth-grade students across the country through fun, STEM-centered activities, and experiments since 1997 Awarded 15 scholarships for a total commitment of $260,000 over four years to the 2022 Southwest Airlines Scholarship Program recipients Launched a SAF website page describing the Company's SAF efforts, including its SAF Policy Launched a Partners website page dedicated to highlighting key organizations the Company is partnering with to advance environmental sustainability Visit southwest.com/citizenship for details about the Company's ongoing ESG efforts   Fourth Quarter and Full Year 2022 Supplemental Financial Results(unaudited) The Company believes certain 2022 measures compared with 2019 are also relevant due to the significant impacts in 2020 and 2021 from the pandemic. Therefore, the below supplemental information is provided for reference. As reported Three months endedDecember 31, Year endedDecember 31, (in millions, except per share and unit costs) 2022 2019 PercentChange 2022 2019 PercentChange Net income $ (220) $ 514 n.m. $ 539 $ 2,300 (76.6) Net income per share, diluted $ (0.37) $ 0.98 n.m. $ 0.87 $ 4.27 (79.6) Operating revenues $ 6,172 $ 5,729 7.7 $ 23,814 $ 22,428 6.2 Operating expenses $ 6,558 $ 5,064 29.5 $ 22,797 $ 19,471 17.1 Operating expenses, excluding Fuel and oil expense $ 4,973 $ 3,959 25.6 $ 16,822 $ 15,124 11.2 Operating expenses, excluding Fuel and oil expense and profitsharing $ 5,022 $ 3,695 35.9 $ 16,695 $ 14,457 15.5 RASM (cents) 16.46 14.32 14.9 16.04 14.26 12.5 Passenger revenue yield per RPM (cents) 17.70 16.00 10.6 17.29 15.82 9.3 CASM (cents) 17.49 12.66 38.2 15.36 12.38 24.1 CASM, excluding Fuel and oil expense and profitsharing (cents) 13.39 9.24 44.9 11.25 9.19 22.4 Fuel costs per gallon, including fuel tax $ 3.27 $ 2.09 56.5 $ 3.10 $ 2.09 48.3 Revenue passengers carried (000s) 32,899 34,299 (4.1) 126,586 134,056 (5.6) Available seat miles (ASMs) 37,490 40,004 (6.3) 148,467 157,254 (5.6) Load factor 83.5 % 83.1 % 0.4 pts. 83.4 % 83.5 % (0.1) pts. Active fulltime equivalent Employees 66,656 60,767 9.7 66,656 60,767 9.7 Adjusted for special items Three months endedDecember 31, Year endedDecember 31, (in millions, except per share and unit costs) 2022 2019 Percent Change 2022 2019 PercentChange Net income (loss) $.....»»

Category: earningsSource: benzingaJan 26th, 2023

Airline Stocks" Jan 26 Q4 Earnings Roster: AAL, ALK & More

Investors interested in the Airline industry can watch out for fourth-quarter 2022 earnings reports of AAL, ALK, JBLU and LUV. Stocks in the Zacks Airline industry are being well served by a buoyant scenario backed by air-travel demand. Air travel demand made a stronger-than-expected recovery as people started booking flights again, thereby boosting passenger revenues, which account for the bulk of most airlines’ top lines. Only a handful of airline companies (two S&P 500 members, to be exact) have reported their fourth-quarter 2022 numbers so far.However, high fuel costs are likely to have hurt the fourth-quarter performance of airline companies. Fuel expenses represent a key input cost for any airline player. High oil price is augmenting fuel costs. Even though oil price declined from their multi-year highs, they remain high. Oil price was up 6.7% in the October-December period.Given this backdrop, investors interested in the Zacks Airline industry keenly await the results of American Airlines AAL, Alaska Air Group, Inc. ALK, Southwest Airlines Co. LUV and JetBlue Airways Corporation JBLU, scheduled to be released on Jan 26.Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.You can see the complete list of today’s Zacks #1 Rank stocks here.Let’s delve deeper.American Airlines’ top-line performance in the fourth quarter is expected to have benefited from upbeat air-travel demand, particularly on the domestic front. Driven by the uptick, AAL expects fourth-quarter 2022 adjusted operating margin to increase 10.25-10.5% (prior view: 5.5-7.5%). Total revenues are expected to register 16-17% growth (prior view: 11-13% growth rate).Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn, boosting the top line. The Zacks Consensus Estimate for load factor is pegged at 84% for fourth-quarter 2022, higher than 80% reported in fourth-quarter 2019.However, high operating costs are anticipated to have affected the bottom-line performance in the to-be-reported quarter.  AAL expects adjusted earnings per share in the range of $1.12-$1.17.Our proven model predicts an earnings beat for American Airlines this earnings season as AAL has an Earnings ESP of +9.79% and a Zacks Rank #2 at present. At the time, the fourth-quarter earnings preview article was issued, AAL had an Earnings ESP of +16.71% and a Zacks Rank #2.American Airlines Group Inc. Price and EPS Surprise American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. QuoteAlaska Air’s fourth-quarter 2022 revenues are likely to have been aided by continued recovery in air-travel demand and an improvement in passenger revenues. On the back of upbeat air-travel demand and favorable pricing, ALK has updated its fourth-quarter 2022 guidance. The company now expects fourth-quarter 2022 total revenues to increase 13-14% from the fourth quarter of 2019 actuals (the previous guidance had hinted at a 12-15% increase).  Load factor (% of seats filled by passengers) is now expected in the 84-86% band (earlier guidance was in the 83-86% range).Meanwhile, with oil prices coming down in the latter half of the December quarter, fuel price per gallon is now expected in the range of $3.50-$3.60 (earlier guidance was in the $3.50-$3.70 band) for fourth-quarter 2022. Although the higher end of the fuel cost guidance has been lowered, escalating operating expenses, primarily due to fuel prices, are likely to have dampened Alaska Air’s bottom line. The Zacks Consensus Estimate for ALK’s fourth-quarter 2022 earnings has been revised downward by 12% in the past 90 days. The Zacks Consensus Estimate for economic fuel cost per gallon is pegged at $3.62 for the fourth quarter, indicating 60.1% growth year over year.Our proven model does not conclusively predict an earnings beat for Alaska Air this season as ALK has an Earnings ESP of -7.82% and a Zacks Rank #3 at present.Alaska Air Group, Inc. Price and EPS Surprise Alaska Air Group, Inc. price-eps-surprise | Alaska Air Group, Inc. QuoteSouthwest Airlines’s fourth-quarter 2022 performance is likely to have been affected by massive flight cancellations due to unfavorable weather conditions during the Christmas holiday weekend. Following the massive cancellations, LUV expects available seat miles (a measure of capacity) to decline approximately 6% in fourth-quarter 2022 from the fourth-quarter 2019 actuals. The previous guidance hinted at a 2% decline in available seat miles for fourth-quarter 2022. Revenues are likely to have been adversely impacted by $400-$425 million. Management expects a pre-tax hit of $725-$825 million to fourth-quarter earnings.However, LUV’s focus on boosting cargo revenues is likely to have aided its performance in the to-be-reported quarter. The Zacks Consensus Estimate for fourth-quarter 2022 cargo revenues hints at an 11.6% sequential increase.Our proven model does not conclusively predict an earnings beat for Southwest Airlines this time around as LUV has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. At the time, the fourth-quarter earnings preview article was issued, LUV had an Earnings ESP of -101.96% and a Zacks Rank #3.Southwest Airlines Co. Price and EPS Surprise Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. QuoteJetBlue Airways’s fourth-quarter 2022 performance is likely to have been unfavorably impacted by Hurricane Nicole-induced disruptions in air-travel demand. The Zacks Consensus Estimate for fourth-quarter 2022 earnings has been revised downward over the past 60 days. Apart from the hurricane, the holiday calendar timing in 2022 had a greater-than-expected negative impact. As a result, JBLU now anticipates revenue per available seat mile for the fourth quarter of 2022 to be at the low-end of its earlier guided range of 15-19% increase from fourth-quarter 2019 actuals. High fuel costs are also likely to have hurt JBLU'S bottom-line performance in Q4. On the brighter side, JetBlue’s efforts to reduce its debt load is encouraging. We are also impressed by the company's efforts to modernize its fleet.Our proven model predicts an earnings beat for JetBlue this earnings season as JBLU has an Earnings ESP of +6.77% and a Zacks Rank #3 at present.JetBlue Airways Corporation Price and EPS Surprise JetBlue Airways Corporation price-eps-surprise | JetBlue Airways Corporation QuoteStay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Southwest Airlines Co. (LUV): Free Stock Analysis Report JetBlue Airways Corporation (JBLU): Free Stock Analysis Report American Airlines Group Inc. (AAL): Free Stock Analysis Report Alaska Air Group, Inc. (ALK): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 25th, 2023

E-cig startup Juul is talking to Philip Morris, Altria, and Japan Tobacco about its future, WSJ reports. Here"s a rundown of the startup"s rise and fall.

Juul rebranded three times, sold assets, and attracted nontraditional investors. Now, it's reportedly in partnership talks with big tobacco companies. Eva Hambach/Getty Images The e-cigarette company Juul reportedly is in talks with three big tobacco companies about its future. The talks with giants like Philip Morris are aimed at securing a possible sale, strategic investment, or other deal, the Wall Street Journal reported. Here's a rundown of the company's history, from its $38 billion valuation to legal settlements. Juul is looking for a fresh start.The e-cigarette maker is talking to some of the biggest names in the tobacco industry, including Altria, Philip Morris, and Japan Tobacco, about options for its future, the Wall Street Journal reported on Wednesday. The talks were in early stages and covered a range of potential options, ranging from an outright sale to one of the larger companies to licensing deals, distribution deals, or a strategic investment, the Journal reported.Juul did not immediately respond to a request from Insider for comment.Over the last several years, Juul has gone from a darling of Silicon Valley to a company beset by legal challenges. It also fell from a valuation of $38 billion in 2018 to just $1 billion last October, according to the Journal.Scroll down to see Juul's rise and decline:2004: At Stanford, the product-design grad students James Monsees and Adam Bowen create the idea for Ploom, Juul’s precursor.Juul.com / YouTubeMonsees and Bowen have said they were smokers who met on smoke breaks while pursuing master's degrees in product design at Stanford University. Their thesis presentation, now posted on Juul's website, describes their product as "the rational future of smoking."2007: Monsees and Bowen found the vaporizer startup Ploom in San Francisco.YouTube / Hyphy SF By February 2008, Ploom raised $900,000 in venture funding, putting its valuation at roughly $3 million, according to PitchBook.A 2011 description of the Ploom device, which sold for $75, described it as a heat-not-burn product that could be filled with single-serve refills called "Ploom Pods." The pods could include tobacco or non-tobacco ingredients, it said. Aug. 1, 2013: Ploom debuts the Pax with a launch party in San Francisco.Ploom at Robin Thicke's album-release party in 2013 in New York.Andrew Toth / Getty ImagesAfter raising close to $5 million, Ploom launched a device called the Pax, a vaporizer for loose-leaf tobacco that could also be used for cannabis.To debut the device, Ploom hosted a launch party in San Francisco's trendy Mission District.At this time, Ploom investors included Japan Tobacco, the maker of Winston and Salem cigarettes, along with the software company Originate and the angel investment group Sand Hill. Feb. 16, 2015: Monsees and Bowen sell the Ploom brand and a vaporizer line to the Japanese tobacco company JTI. They rebrand as Pax Labs.Japan Tobacco Inc.'s president and CEO, Mitsuomi Koizumi, using a Ploom during an interview with Reuters at the company's headquarters in Tokyo in 2017.Toru Hanai / ReutersAs part of the deal, JTI said in a statement that Ploom would buy back JTI's minority stake in the startup.June 1, 2015: Pax Labs launches the Juul with a party in New York City.SRITAPax introduced the Juul with a launch party in New York City.A trove of images collected by Stanford researchers suggested that the campaign focused on a young audience. Guests were invited to try Juul's products free and share selfies on social media, Business Insider reported."Juul's launch campaign was patently youth-oriented," Robert Jackler, a practicing Stanford physician who was the principal investigator behind the tobacco-image collection, told Business Insider.2016: Juul sales skyrocket 700%.An ad on Juul's website from 2016.Juul devices gained popularity. Sales rose 700% in 2016, ABC 7 News reported.July 1, 2017: Monsees and Bowen spin out Juul Labs as an independent company and name former Pax Labs CEO Tyler Goldman CEO.Pax Labs; Melia Robinson/Business InsiderGoldman came to Pax from the music-streaming startup Deezer then took over Juul Labs.Nov. 2017: Juul is the best-selling e-cigarette on the market.Pax LabsJuul said it'd sold 1 million units. The company also captured a third of the e-cigarette market, according to Nielsen data.Dec. 11, 2017: CEO Tyler Goldman leaves Juul. The company replaces him with Kevin Burns.Juul's new CEO, Kevin Burns.Juul/YouTubeGoldman left Juul to "pursue new entrepreneurial activities." The company hired Burns from the yogurt company Chobani.Dec. 2017: Juul raises $112 million in venture funds and adds Nicholas Pritzker to its board, according to PitchBook.The industrialist A.N. Pritzker in 1982. The wealthy Pritzker family owned the chewing-tobacco giant Conwood before selling it to the tobacco giant Reynolds. They also founded and expanded the Hyatt Hotels chain.AP PhotoThe fresh funds came from firms including Tao Capital, Fidelity, and Evolution, according to PitchBook.Nicholas Pritzker, Tao's cofounder, joined Juul's board, CNBC reported. Pritzker is a member of the wealthy Pritzker family, which owned the chewing-tobacco giant Conwood before selling it to the tobacco giant Reynolds. The Pritzkers also founded and expanded the Hyatt Hotels chain.On an undisclosed date, Tao Capital sold its stake in Juul to the hedge fund Tiger Global and Manhattan Venture Partners, PitchBook said.The venture fund M13, another early Juul investor, sold its shares in the spring of 2018.This slide has been updated with new information about M13's investment.March 2018: Dozens of outlets report that 'Juuling' is an epidemic at high schools.A Juul ad from 2016.Pax LabsNational news outlets including National Public Radio, USA Today, and Business Insider reported that the Juul had a loyal and growing following among young people.All of the reports said teens were taking to social media to brag about being able to sneak puffs in class or in the bathroom thanks to Juul's discreet design.April 2018: Led by Commissioner Scott Gottlieb, the US Food and Drug Administration starts an 'undercover blitz' to crack down on sales of the Juul to minors.Scott Gottlieb, then the FDA commissioner.ReutersIn what the FDA said was the largest coordinated enforcement effort in agency history, the FDA issued more than 1,300 warning letters and fines to retailers who it said were illegally selling Juuls and other e-cigarettes to minors. The FDA found the retailers by conducting what it called "a nationwide, undercover blitz.""Let me be clear to retailers," Gottlieb, then the FDA's commissioner, said in the statement, "this blitz, and resulting actions, should serve as notice that we will not tolerate the sale of any tobacco products to youth."April 2018: Wall Street analysts warn that Juul is starting to encroach on Big Tobacco's financial terrain and could negatively affect Altria stock.A close-up view of cigarettes on June 10, 2015 in Bristol, England. Health campaigners have asked for a levy on the tobacco industry to help fund anti-smoking measuresMatt Cardy/Getty ImagesIn a research note, Citigroup analysts warned investors that the Juul was beginning to disrupt tobacco stocks.The note suggested that the rise of the Juul could bode poorly for tobacco companies — including Altria, British American Tobacco, and Imperial Brands — as sales were falling faster than expected."The US tobacco market is beginning to be disrupted by Juul," the analysts wrote, adding, "We don't expect underlying cigarette trends to improve much in the rest of 2018."May 2018: Juul doubles its staff to 400 people.Pax LabsJune 2018: San Francisco bans flavored e-cigs like the Juul, prompting an endorsement from Michael Bloomberg.An ad from the California Department of Public Health supporting San Francisco's ballot measure to ban the sale of flavored e-cigarettes like Juul.California Department of Public HealthBloomberg, the former New York City mayor who is CEO of Bloomberg Philanthropies, called the move "an important step forward for public health" and said it should embolden other cities and states to follow suit.July 8, 2018: Wall Street analysts say Juul is reviving the formerly comatose e-cig market, which had been slumping since 2014.AP Photo/Craig MitchelldyerIn a research note, Morgan Stanley analysts credited Juul with "driving a revival in the US e-cig market," adding that sales of Juul devices "accounted for almost the entire incremental increase in US e-cig sales as a percent of total cigarette and e-cigarette sales in the last year."July 10, 2018: Juul raises $1.2 billion in a round that values the company at more than $16 billion, according to PitchBook.Bowen and Monsees at the Hotel Tortue in December 2018 for Juul's launch in Germany.Getty Images / Picture AllianceThe seven investors in the round included a maker of marijuana therapeutics, called Applied Biosciences, along with the the venture firm Bracket Capital, the hedge funds Darsana Capital and E Squared Capital, the investment giant Fidelity, the angel investor Sand Hill, and Tiger, according to PitchBook.Aug. 21, 2018: Israel bans Juul products, calling them a 'grave risk to public health' because of their high nicotine content.A package of the Juul device and flavored Juul nicotine Pods.JUUL LabsIn a statement, Israel's Health Ministry said it's banning the sale and import of Juul devices because they contained more than 20 milligrams per milliliter of nicotine and presented "a grave risk to public health," Reuters reported.Sept. 11, 2018: The FDA deepens its crackdown on Juul and other e-cig makers.FDA commissioner Scott GottliebReutersIn a statement, then-Commissioner Gottlieb said the FDA was working on creating a system to "properly regulate" e-cigarettes like the Juul.He said the aim was twofold: make e-cigarettes available as a less-dangerous alternative for adult smokers, but also keep them out of the hands of young people.Oct. 2, 2018: The FDA surprises Juul at its headquarters and seizes 'thousands of pages of documents' as part of an investigation into its marketing practices.Reuters/Ronen ZvulunThe agency was running an investigation into whether Juul marketed its products to teens, CNBC said.The visit was an extension of the FDA's request in April for materials related to how Juul presented its products and whether they were designed to appeal to kids, according to CNBC.Oct. 2018: Juul surges in popularity, now accounting for over 70% of the US e-cigarette market, according to Nielsen data.Reuters / Brendan McDermidNov. 13, 2018: Juul stops selling its sweet and fruity flavors at stores, making those varieties only available online.Hollis Johnson/Business InsiderJuul says it will temporarily stop selling its flavored e-cigarettes in stores.The move comes on the heels of a similar ban on flavored e-cigs that the city of San Francisco enacted over the summer.Researchers nearly unanimously praised the move, which they say could help protect young people by making the products less appealing and harder to purchase. Juul's flavored varieties will still be sold online, the company says.Nov. 15, 2018: The FDA announces plans to curb flavored e-cig sales after reports that youth vaping has ballooned 78%.A high-school student vaping near a school campus in Cambridge, Massachusetts.Associated Press2018: The Federal Trade Commission begins investigating whether Juul marketed its products to minors.Members of the Federal Trade Commission.REUTERS/ Leah MillisThe Federal Trade Commission began looking into Juul's use of influencers and other marketing tools to appeal to young people, The Wall Street Journal reported in August 2019.According to The Journal, the FTC's investigation began before it started reviewing a deal between Juul and the Marlboro maker, Altria, in December 2018.Dec. 20, 2018: Altria buys 35% of Juul for $12.8 billion, bumping Juul's valuation to $38 billion. Gottlieb accuses both companies of backing away from pledges to curb youth vaping.Packs of Marlboro cigarettes on sale.REUTERS/Brian SnyderIn what the Silicon Valley Business Journal called "the biggest investment ever in a US venture-backed company," Marlboro and the Parliament cigarette maker, Altria, paid $12.8 billion for a third of Juul. That gave Altria more combustible-cigarette market share than the next seven brands combined, according to the Centers for Disease Control and Prevention.Juul, which had an annual revenue of about $2 billion at the time, also received a $2 billion bonus from Altria to distribute among its 1,500 employees, CNBC reported. That would have been about $1.3 million a person.On the heels of the deal, Gottlieb called out both companies, saying they were backing away from previous pledges to fight teen vaping. March 5, 2019: In a surprise announcement, Gottlieb announces he's leaving his post as FDA commissioner.FILE PHOTO: U.S. Food and Drug Commissioner Gottlieb attends interview at Reuters HQ in New YorkThomson ReutersGottlieb, a well-liked figure who spent just two years steering the country's top food and drug regulator, said he was leaving in a month to spend more time with his family in Connecticut.The commissioner had made a name for himself as both a vocal critic of e-cigarette startups like Juul and a speedy approver of new pharmaceutical drugs.In a resignation letter, Gottlieb wrote that one of his accomplishments at the FDA was taking actions against "bad actors that put Americans at risk."March 13, 2019: Gottlieb announces a crackdown on flavored e-cig sales.Reuters / Mike SegarRoughly a week after announcing his departure from the FDA, Gottlieb released a plan to crack down on flavored e-cigarette sales at gas stations, pharmacies, and convenience stores. The plan would also crack down on websites without buffers against youth purchases, such as age-verification software or quantity limits.April 3, 2019: The FDA says it's looking into a 'potential safety issue' related to seizures tied to vaping.ShutterstockIn a statement, Gottlieb said his agency had seen reports suggesting that a small number of e-cigarette users (35 cases from 2010 to early 2019) had experienced seizures after vaping.By August, the FDA said it had received 127 reports — but noted that the new figure might simply mean more people were coming forward, not necessarily that cases were increasing.Gottlieb also noted that seizures were known as possible side effects of nicotine poisoning and said the agency would continue exploring whether there was a connection.April 8, 2019: Democrats in the US Senate launch an investigation into Juul's deal with Altria as well as its social media and advertising practices.Sen. Elizabeth Warren of Massachusetts.Sergio Flores/Getty ImagesEleven Democratic senators, including the party whip Dick Durbin and the presidential candidate Elizabeth Warren, wrote a letter to Juul demanding that the company answer questions about its advertising practices and its deal with Altria, CNBC reported.June 13, 2019: The US House of Representatives announces an investigation of Juul's marketing and the Altria deal.Members of the U.S. House of Representatives are sworn in on the House floor January 3, 2017.Jonathan Ernst/ReutersHouse Democrats launch their own investigation into Juul, Fortune reports.July 16, 2019: Juul's CEO apologizes to parents of teens addicted to its vaping products.CBS This MorningIn a CNBC documentary, Juul Labs CEO Kevin Burns issued an apology to parents of teens who were addicted to the company's vaping products."First of all, I'd tell them that I'm sorry that their child's using the product," Burns said.July 25, 2019: Officials in Wisconsin warn of eight cases of severe lung disease in teens who'd vaped. It's unclear what kinds of products or substances are involved.Simah Herman, 18, on September 19 with a photo of her former vaping devices in Los Angeles. Herman was in a medically induced coma and treated for pneumonia and lung-disease from vaping.Reuters / Lucy NicholsonIn July, Wisconsin's chief medical officer wrote a memo to healthcare providers warning them about a cluster of sick adolescents who had used e-cigarettes. Chest X-rays of the teens revealed similarities in lung damage, he says. The following month, the CDC released an emergency notice about 30 cases of vaping-related lung illness in Wisconsin. In mid-August, officials reported the first death tied to vaping-related lung illness: an adult in Illinois. By September, the CDC and the FDA said there had been 530 confirmed and probable cases of the mystery illness since June. Seven people died. The investigation is ongoing, and officials have yet to find a substance or brand that's common among all the cases.Aug. 16, 2019: Juul raises $785 million in equity and debt financing from Proioxis Ventures, according to PitchBook.Melia Robinson/Business InsiderThe funds will be used to speed Juul's expansion overseas, according to PitchBook. The figure brings the company to $14.2 billion in funds raised.Aug. 29, 2019: Bloomberg says Juul devices were involved in three reports of seizures linked to vaping.Brendan McDermid / ReutersIn three reports submitted to the FDA, people said they or their children had used a Juul before experiencing seizures, Bloomberg News reported. Bloomberg obtained the reports through a public records request.In two of the three reports, the FDA wasn't able to officially confirm that a Juul device was involved, according to Bloomberg.Aug. 29, 2019: Juul's CEO warns people against using Juuls and says vaping's long-term health effects are unknown.Juul's new CEO, Kevin Burns.Juul/YouTubeIn an interview with CBS, Burns said anyone who wasn't already using nicotine, the addictive drug in Juul, should not start."Don't vape. Don't use Juul," Burns told CBS.Sept. 9, 2019: The FDA slams Juul for portraying its e-cigs as 'totally safe' and marketing them to kids at schools.An ad showing a plate of food suggesting that users "save room for Juul."JuulIn a warning letter, the FDA said Juul wrongly painted its e-cigarettes, known in the industry as ENDS, as safer than cigarettes and marketed them intentionally to young people."Referring to your ENDS products as '99% safer' than cigarettes, 'much safer' than cigarettes, 'totally safe,' and 'a safer alternative than smoking cigarettes' is particularly concerning because these statements were made directly to children in school," the FDA letter said."Our concern is amplified by the epidemic rate of increase in youth use of ENDS products, including Juul's products," the letter added.Sept. 17, 2019: Juul sales are halted in China for unclear reasons.An employee at a Tmall logistics center in Suzhou, China.Thomson ReutersA selection of flavored Juul products that went up for sale on two online Chinese marketplaces, JD.com and Tmall, were removed within a week, The Wall Street Journal reported. Both retailers declined to say why.Juul had long been planning to launch in China, where more than 300 million people smoke, according to the World Health Organization. Its nicotine refills, or Juul Pods, are manufactured in Shenzhen, China.Sept. 18, 2019: India bans vaping, citing the "impact of e-cigarettes on the youth."Reuters / Neil HallIndia outlawed the production, sale, import, and advertising of e-cigarettes, citing the need to stop the "impact of e-cigarettes on the youth," BuzzFeed News reported. Penalties include jail time and fines of up to $7,000.Juul had been planning to launch in India, home to more than 106 million smokers — second only to China — by the end of 2019.Sept. 23, 2019: The US Attorney's Office for the Northern District of California has reportedly launched a criminal investigation into Juul.REUTERS/Ronen ZvulunThe Wall Street Journal reported that federal prosecutors in the US Attorney's Office for the Northern District of California were conducting a criminal investigation of Juul. Further details, such as the focus of the investigation, were not available, and Juul didn't respond to a request for comment from Business Insider.Several other investigations are ongoing, including an investigation by the Federal Trade Commission focusing on whether Juul marketed to teens and an FDA investigation focused on marketing, outreach, and Juul's uniquely high nicotine content.Sept. 24, 2019: Juul reportedly prepares to scale back its staff.A woman exhaling a puff of vapor from a Juul e-cigarette.Associated Press / Craig MitchelldyerJuul began preparing to restructure its staff as it faced slower sales resulting from increasing reports about the mysterious vaping-related lung illness, the proposed US ban on flavored e-cigarettes, and a variety of other investigations, The Wall Street Journal reported.The company employs roughly 3,900 people, according to The Journal, up from the 200 it had in 2017.For now, Juul plans to hire less aggressively and start outlining plans to cut some jobs, according to The Journal, but will still continue to expand. Sept. 25, 2019: CEO Kevin Burns steps down and is replaced by longtime tobacco executive K.C. Crosthwaite.Former Juul CEO Kevin Burns.CBS This MorningCrosthwaite was most recently chief growth officer at Altria, and has worked in tobacco for more than 20 years.In announcing the change, Juul also said it would suspend US advertising and some lobbying efforts. Crosthwaite said he would "strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate."Oct. 7, 2019: A crop of school districts across three states sues Juul.ShutterstockFour school districts sue Juul in what appears to be the beginning of a trend.The districts include Three Village Central in New York, La Conner in Washington, Olathe in Kansas, and Francis Howell in Missouri. In separate suits filed on Monday, the districts argue that Juul created a public nuisance by intentionally marketing to kids; misrepresenting its products' nicotine content; and endangering teens' health, according to public documents that Business Insider viewed.Cindy Ormsby, an attorney for the Missouri case, told the Riverfront Times that the Francis Howell lawsuit is "part of a coordinated package of litigation filed by school districts across the country, each dealing with a similar crisis of students addicted to nicotine." In September, Kansas City school district Goddard became one of the first to announce that it was preparing a lawsuit against Juul.The lawsuits seek unspecified damages and legal fees.Oct. 17, 2019: Juul extends its ban on sweet and fruity flavors to include online sales.SRITAJuul announces that it is stopping online sales of its mango, fruit, cucumber, and cream varieties. Last fall, the company temporarily banned sales of those varieties in stores. As of Oct. 17, those flavors can't be purchased in-person or online.In a statement, Juul says it "will continue to develop scientific evidence to support the use of these flavored products."Oct. 28, 2019: Juul reportedly plans to cut 500 jobs before year's end. Its chief marketing officer departs the following day.Robyn Beck / AFP / Getty ImagesJuul looks to eliminate roughly 500 jobs by the end of the year, the Wall Street Journal reports.The cuts are part of a company-wide reorganization effort, according to the journal, and will involve anywhere between 10-15% of Juul's total workforce. "As the vapor category undergoes a necessary reset, this reorganization will help Juul Labs focus on reducing underage use, investing in scientific research, and creating new technologies while earning a license to operate in the US and around the world," KC Crosthwaite, Juul's new CEO, said in an emailed statement provided to Business Insider.The following day, the Journal reports that Juul's chief marketing officer is departing."Craig Brommers, an incredibly talented marketing executive, has asked to transition out of Juul Labs in the coming months so that he can pursue opportunities with other companies," a Juul spokesperson told the Journal.The spokesperson also said that as a result of Brommer's departure, the CMO position would be cut.Oct. 29, 2019: Juul names a new chief financial officer after its existing CFO asks to leave.Smith Collection/Gado/Getty ImagesJuul appoints Guy Cartwright its new chief financial officer after CFO Tim Danaher asks to leave the company, the Wall Street Journal reports.Cartwright previously served as managing director of the investment firm TowerBrook Capital Partners LP, and joined Juul in July, according to the Journal. Danaher had served as Juul's CFO since 2014.Oct. 31, 2019: Marlboro maker Altria, which owns a third of Juul, slashes the value of its stake in the company. Juul is now valued at $24 billion instead of $38 billion.Justin Sullivan / Getty ImagesMarlboro maker Altria, which last December purchased a 35% stake in Juul for $12.8 billion, cuts the value of its investment in the company by $4.5 billion.The move reveals that Juul is now worth $24 billion, down from $38 billion.On a conference call, Altria cited unexpected market shifts like regulatory crackdowns abroad and a proposed US flavor ban."We're not pleased to have to take an impairment charge on the Juul investment," Altria CEO Howard Willard said on the call. "We did not anticipate this dramatic a change in the e-vapor category," he added.November 7, 2019: Juul stops selling mint flavored options, leaving only menthol and tobacco flavored refillable cartridges.A screenshot shows 2015 advertising for Juul products displayed in a print magazineReutersJuul announces it will stop selling mint-flavored refillable cartridges, or Juul pods. In a press release, the company said it would immediately stop accepting orders for the mint-flavored pods from retail partners and stop selling mint-flavored pods online.According to the release, Juul's decision was based partially on new research  which suggested that mint and mango were the most popular flavors among high school students who Juul."These results are unacceptable," Juul Labs CEO KC Crosthwaite said in the release, adding, "that is why we must reset the vapor category in the US and earn the trust of society by working cooperatively with regulators, Attorneys General, public health officials, and other stakeholders to combat underage use."2020: Amid the pandemic, Juul lays off 40% of its workforce in April, 2020. It then lays off over half of its remaining staff, resulting in about a further 1,000 employees being cut.Shopkeepers stand inside a Juul shop at a shopping mall in Jakarta, Indonesia, December 30, 2019.REUTERS/Ajeng Dinar Ulfiana2021: By 2021, Altria slashes its valuation for Juul to $5 billion, while Juul itself asserts it was worth $10 billion. Two years prior, the company was valued at $38 billion.A hand with a cigarette is seen in front of displayed logos of Philip Morris and Altria in this picture illustrationReutersSeptember 30, 2021: The CDC and FDA releases a study that finds that over 2 million middle-and-high-school students in the US were using e-cigarettes.Eva Hambach/Getty ImagesThe study found that eight in 10 of those students used flavored e-cigarettes."These data highlight the fact that flavored e-cigarettes are still extremely popular with kids," said Mitch Seller, the director of the FDA's Center for Tobacco Products. "And we are equally disturbed by the quarter of high school students who use e-cigarettes and say they vape every single day."February, 2022: A judge rules that Altria can keep its investment in Juul.FILE - In this Dec. 20, 2018, file photo Juul products are displayed at a smoke shop in New York. The company that makes Marlboro cigarettes will take a $4.1 billion hit from its investment in Juul. Altria took a 35% stake in the e-cigarette company at the end of 2018 at a cost of almost $13 billion. The Richmond, Va., company on Thursday, Jan. 30, 2020 cited burgeoning legal cases that it expects to grow. (AP Photo/Seth Wenig, File)Associated PressAn administrative judge ruled that Altria didn't break antitrust laws by taking a 35% stake in Juul. The Federal Trade Commission had sued in 2019, and can still appeal the ruling. June 23, 2022: The FDA bans Juul from selling and distributing its e-cigarette products in the US, and also orders that all products currently in the market be removed.Markets InsiderAltria's stock plunged 10% on news of the ban. The FDA did briefly prohibit Juul products in the US, though an appeal of the decision forced the agency to put its decision on hold.December 6, 2022: Juul agrees to settle roughly 5,000 lawsuits that accused the company of marketing its products to teens and children.Julia NaftulinJuul got an equity investment to pay for the settlement costs, though the financial terms were not disclosed, the Wall Street Journal reported at the time.January 25, 2023: Juul executives were in discussions with major tobacco companies, including Philip Morris, Japan Tobacco, and Altria, the Wall Street Journal reported.Close-up of logo for e-cigarette or vape company Juul on glass window of convenience store in San Ramon, California, December 6, 2019.Smith Collection/Gado/Getty ImagesThe talks included multiple possibilities, including an outright sale of Juul as well as strategic investments and licensing and distribution deals, the Journal reported.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 25th, 2023

Does Old Dominion Show That Trucking Is Hitting The Brakes?

Shares of trucking company Old Dominion advanced 19.28% in the past three months and 9.50% in January. Revenue grew at double-digit rates for the past seven quarters as the pandemic ignited the market for freight transportation. However, revenue growth declined from 33% to 15% in the past two quarters. Fellow S&P 500 component J.B. Hunt […] Shares of trucking company Old Dominion advanced 19.28% in the past three months and 9.50% in January. Revenue grew at double-digit rates for the past seven quarters as the pandemic ignited the market for freight transportation. However, revenue growth declined from 33% to 15% in the past two quarters. Fellow S&P 500 component J.B. Hunt reported disappointing earnings and revenue this week. A top industry analyst expects the industry to remain sluggish until next year. 5 stocks we like better than Old Dominion Freight Line The health of the trucking industry can be a valuable barometer for overall economic conditions. The industry has been on a gradual upward trajectory since June regarding price performance, with S&P 500 component Old Dominion Freight Line Inc. (NASDAQ:ODFL) among the group’s top performers. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. At $34.33 billion, Old Dominion is the largest company in its industry by market capitalization. It’s also among the top price performers, advancing 19.28% in the past three months and 9.50% in January. Almost astonishingly, its one-year loss is only 0.16%, meaning it’s well-positioned to capitalize on a continued industry- or market-wide uptrend. But is there cause for concern? Old Dominion’s revenue has been growing at double-digit rates for the past seven quarters as the pandemic ignited the market for freight transportation. However, revenue growth declined from 33% to 15% in the past two quarters. The same trend is occurring on the earnings side, where the company grew net income at double-digit rates for the past eight quarters. But net income, too, is slowing. In the past two quarters, earnings growth decelerated from 53% to 36%. That’s still an excellent growth rate, but if customers put on the brakes, that’s something to watch for. Industry-wide Slowdown? It’s also worth following the entire industry to be sure Old Dominion’s slowdown is not company-specific. Other truckers are also seeing dramatic slowdowns. Wednesday, fellow S&P 500 component J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) reported $1.92 per share on revenue of $3.649 billion, missing top and bottom-line views, as MarketBeat earnings data show. That was a year-over-year decline of 16% in earnings and revenue growth of just 4%, well below the double-digit pace in the past two years. However, shares rallied as the company increased its dividend. In the earnings call, company president Shelly Simpson sought to ease investor concerns about a lengthy downturn, saying, “We have had good signals from our customers about Q2 starting up back to a more normalized or having a more normal environment.” There’s no major index that tracks trucking in particular. However, the SPDR S&P Transportation ETF (NYSEARCA: XTN) includes J.B. Hunt, Old Dominion, and Landstar System, Inc (NASDAQ: LSTR), among other trucking and logistics companies. It also tracks airlines, railroads, bulk shippers, and freight forwarders. While it’s not a “pure play” trucking index, it offers a glimpse into what manufacturers are shipping to various business customers. That index advanced 10.77% in the past three months and 9.41% in January. That doesn’t look so bad, but is pessimism setting in? Before Friday’s opening bell, the S&P transportation ETF was down 1.86% for the week. That still outpaced the broader index, which declined 2.47% as of Thursday’s close. Is Trucking The Best Place To Park Money Right Now? So where does that leave Old Dominion? While it’s among the better performers within the industry, passing J.B. Hunt in both earnings and price performance, there’s still the question of whether the trucking industry is the best place to invest right now. It’s a middle-of-the-pack industry whose price performance has worsened in the past three months.   Overall, the industry may lag for the foreseeable future, as indicated by Avery Vise, an industry analyst and vice president of the trucking segment at FTR Transportation Intelligence. FTR publishes the Trucking Conditions Index, which tracks the changes in five significant conditions affecting the U.S. trucking market. In a recent statement, Vise said, “The outlook for trucking conditions has changed little, and we still do not forecast any positive readings for the Trucking Conditions Index until late 2024. The recent deceleration in consumer inflation certainly is a positive development, but we do not anticipate it will lead to any meaningful increase in consumption.” He added that the industrial sector remains sluggish. However, he echoed J.B. Hunt’s Simpson, saying, “Market conditions for carriers might outperform our current outlook starting late this year as capacity could prove tighter than reflected in our forecast, potentially leading to stronger rates.” In other words, Old Dominion, J.B. Hunt, and other carriers may be worth looking at, but perhaps not. Should you invest $1,000 in Old Dominion Freight Line right now? Before you consider Old Dominion Freight Line, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Old Dominion Freight Line wasn't on the list. While Old Dominion Freight Line currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. Article by Kate Stalter, MarketBeat.....»»

Category: blogSource: valuewalkJan 24th, 2023

TurboTax has lobbied against a free tax filing system for decades. Its head says the US" path toward one is "unquestionably a conflict of interest."

The US seems to be on a path toward a free tax filing system, despite lobbying by companies like TurboTax that say it's unethical. In the US, tax filing services like TurboTax and H&R Block spend millions of dollars lobbying against free tax filing services.Witsarut Sakorn/EyeEm/Getty Images The Inflation Reduction Act passed last summer allots funds to explore a free federal tax filing service.  The head of TurboTax's parent company says that a government-run tax filing service would be unethical.  The federal and state governments have accused TurboTax of misleading taxpayers about free services in recent years. American taxpayers spend billions each year to file their taxes, but the country is inching closer to a free federal tax-filing system for you to use. Sasan Goodarzi, CEO of Intuit, isn't on board with such a system, however. "Unquestionably, a government-run tax preparation system that makes the tax collector the investigator, auditor, enforcer, and now also the preparer, is a conflict of interest," Goodarzi told Insider. Intuit, a global financial technology platform, owns TurboTax, one of the leading paid tax filing services. Rick Heineman, vice president of corporate communications at Intuit, gave the same description to ProPublica last year in response to the Inflation Reduction Act's requirement that the IRS study free tax filing options. The IRA set aside $15 million for the Treasury Department to explore creating a free federal tax-filing website. "Tax filing should be simple," Treasury Secretary Janet Yellen said after the IRA passed last year. "I recently came across a statistic that it takes an average American 13 hours to file a tax return. Compare that with Sweden. Some taxpayers can file simply by replying to a text message. We can and must do better." Intuit additionally says that such a system would be a waste of government funds. "100% of American taxpayers can file their taxes completely free of charge today at no cost to the government," the company told Insider in a statement. "Creating a government run tax preparation program would be a waste of taxpayer dollars and further disenfranchise low income taxpayers. A direct to IRS tax prep system is a multi-billion dollar solution looking for a problem."Eight OECD countries entirely prepare returns for the majority of taxpayers. Estonia is often cited by American politicians as an ideal, as it takes about five minutes to file someone's returns there. In the US, tax filing services like TurboTax and H&R Block spend millions of dollars lobbying against free tax filing services. And they've come under heat for that pressure in recent years. The New York Attorney General's Office began an investigation with other authorities after ProPublica published a report alleging that TurboTax's free filing product misled millions of lower-income people into paying for services that should have been free. New York State ordered Intuit to stop advertising its services as "free," and found that Intuit "engaged in several deceptive and unfair trade practices," that deterred taxpayers from using the IRS' free filing program, according to New York Attorney General Letitia James.  Intuit paid $141 million in restitution to 4.4 million taxpayers after that investigation. Intuit said that it already follows most of the advertising practices required by the settlement with New York and in a statement said that it "expects minimal impact to its business from implementing the remaining changes going forward."And last year, the US Federal Trade Commission sued TurboTax, demanding that courts keep Intuit from advertising its tax services as "free." Intuit has said that it follows IRS rules and has called the complaint "simply not credible." "Far from steering taxpayers away from free tax preparation offerings, our free advertising campaigns have led to more Americans filing their taxes for free than ever before and have been central to raising awareness of free tax prep," Kerry McLean, executive vice president and general counsel of Intuit, said in a statement. Almost 100 million Americans have filed their taxes for free with TurboTax in the last eight years, McLean said. Goodarzi says that "creating a new system would cost billions of taxpayer dollars and jeopardize the financial freedom of millions more." Free options for filing taxes already exist for most people, including those with more than $73,000 in adjusted gross income. For those making less than $73,000 annually, the IRS offers free guided tax preparation. Commercial providers such as TurboTax and Tax Act offer their own free services for those earning under a certain amount. And the company maintained such in response to the FTC complaint. "Intuit has always supported consumers filing for free as a founding member of the IRS Free File program and in our other practices," Intuit said in a statement. "The FTC's complaint fails to acknowledge the reality that Intuit was, at all times, in compliance with the IRS requirements."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 18th, 2023

Futures Trim Losses As Focus Turns To Earnings

Futures Trim Losses As Focus Turns To Earnings US stock futures slipped for a second day as investors braced for a busy week of parsing earnings reports for signs of an earnings recession, falling profitability and an economic slowdown. Contracts on the S&P 500 fell 0.2% at 7:10 a.m. ET, recovering from a -0.5% drop earlier, while Nasdaq 100 futures dropped 0.3% after trading in the cash market was closed on Monday for a holiday. The dollar was flat after rebounding from an 8 month low on Monday while the US 10-year Treasury yield rises to top about 3.55%. In premarket trading, shares of Chinese electric-vehicle makers like XPeng Inc. retreated amid worries over demand and competition after the company slashed prices on its models in China. Bank stocks were also lower as Goldman Sachs and Morgan Stanley were set to report their fourth-quarter results before the bell. In corporate news, Bank of America shares got their only sell-equivalent rating after the company flagged a slowdown in lending last week. Whirlpool fell 6% in early New York trading after reporting fourth-quarter net sales of $4.90 billion, compared with forecasts for $5.15 billion. Freeport McMoRan slid 2.6%. Bloomberg Intelligence analysts predict copper could fall to $8,000 a ton from more than $9,000 now as physical demand indicators are weakening. Here are some other notable premarket movers: Pfizer (PFE US) stock slides 1.5% after it was cut to equal-weight from overweight at Wells Fargo, which sees an earnings downgrade cycle on the horizon for the pharma giant. Cryptocurrency-related stocks rally, as Bitcoin extends its winning streak into a 14th day and trades above the $21,000 level. Coinbase +6%, Riot Platforms +8.3%, Bakkt +10%, Marathon Digital +9.4% MGO Global rises 43% to $6.65 in premarket trading, reversing losses from a volatile initial trading session in which the stock more than tripled before closing lower, the latest in a series of wild debuts for US small-cap listings. Keep an eye on Tesla after Jefferies cut its target for the stock to $180 from $350, as the brokerage slashed sales and earnings estimates for the electric-car maker. The company last week cut prices across its lineup in an effort to stoke demand after several quarters of disappointing deliveries. Watch Wells Fargo stock as it was cut to hold from buy at Jefferies with the risk-reward on the US lender now looking more balanced. Keep an eye on utilities as KeyBanc Capital Markets turned more negative on the outlook for the sector into 2023, downgrading CenterPoint Energy and Southern Co to sector weight. Watch Global Payments stock as it was upgraded to overweight at Morgan Stanley, which says that fintech and payments sector offers “increasingly compelling” valuations from a more favorable backdrop. Piper Sandler downgrades Bandwidth (BAND US), DigitalOcean (DOCN US) and RingCentral (RNG US) to neutral as it tweaks its cloud automation software ratings, with Nice (NICE US) upgraded to overweight and Nutanix (NTNX US) its top pick. Morgan Stanley is guarded on hardline, broadline and food retail coverage to start 2023 as it sees more headwinds than tailwinds, with the magnitude of the headwinds outweighing the tailwinds. Wayfair (W US) and Kroger (KR US) upgraded to equal-weight from underweight; National Vision (EYE US) downgraded to equal-weight from overweight. Bank stocks reversed losses to trade higher on Friday, even after JPM CEO Jamie Dimon and BofA's Brian Moynihan warned of an uncertain economic environment as four of the six biggest US lenders reported their fourth-quarter results. Lenders Goldman Sachs Group Inc. and Morgan Stanley report earnings on Tuesday. Investors will dissect results for the impact of the Federal Reserve’s interest rate hikes and signs of consumer spending slowdown. “The spread between our earnings model and consensus forecasts is nearly as wide as it’s ever been and suggests a drawdown in stocks for which most are not prepared,” Morgan Stanley’s Michael Wilson wrote in his latest gloomy note. “The main culprit is the elevated and volatile inflationary environment which is likely to play havoc with profitability.” Meanwhile, according to Bank of America’s latest global fund manager survey, investors are the most underweight on US equities since 2005 as improving market sentiment sends them flocking toward cheaper regions. Allocation to US equities “collapsed” during the first month of 2023, with investors a net 39% underweight the asset class, they said, exceeding even the UK’s 15%. At the same time, participants in the January poll were “a lot less bearish” than in the fourth quarter, sparking a rotation to emerging markets, Europe and cyclical stocks, and away from pharmaceuticals, technology and the US, strategists led by Michael Hartnett wrote in a note. Investors had their expectations for a pause in central-bank tightening damped by ECB Chief Economist Philip Lane, who said interest rates will have to move into restrictive territory to bring inflation back to target. BlackRock Inc. Vice Chairman Philipp Hildebrand said he saw no chance of policy easing this year. Data including a record increase in UK wages signaled further rate hikes are necessary. “We’ve just hit pause and I am sure there’s some profit taking,” said James Athey, investment director at Edinburgh-based abrdn. “We‘re into the earnings season which likely brings with it risks and volatility. If you run a risk-parity or 60/40 book, you’ve done brilliantly already this year. It seems prudent to trim some risk.” US corporate earnings may set the tone for traders this week as the reporting season moves up a gear. Of the 30 companies on the S&P 500 that have posted earnings so far, 24 have beaten analysts’ expectations. However, UBS Wealth Management expects “quite a bit of downside here on the earnings” in the US, according to Hartmut Issel, head of Asia Pacific equities. European stocks and bonds are both in the red as investors contemplated the prospect of ongoing monetary tightening after ECB Chief Economist Lane said rates will have to move into restrictive territory. The BOE are also facing pressure to continue hiking after UK wages rose at their fastest rate on record, excluding the pandemic. The Stoxx 600 was down 0.2% and on course to snap a four-day winning streak with technology, real estate and autos leading declines. Here are some of the most notable European movers: ABB shares rise as much as 1.9% after Redburn upgrades stock to buy from sell, saying recent business exits could mean the Swiss industrial group can grow faster than earlier expected Wacker Chemie, one of Europe’s largest producers of polysilicon, rose as much as 3.7% after prices of the material used in solar panels surged in China Infineon shares rise as much as 2.4% after Barclays starts coverage of European semiconductor stocks with a preference for Infineon and STMicro, rating both overweight Alten shares rise as much as 4.5% after Kepler Cheuvreux raised its recommendation for the French engineering company to buy from hold, citing its ability to deliver strong growth Lindt shares rise as much as 1.1% after the Swiss chocolate maker delivered estimate-beating organic sales growth, Vontobel says, with FY23 guidance in line with mid-term targets Wise shares fall as much as 7.1% after the UK money-transfer firm’s volume growth slowed, coming in below analyst expectations in the fiscal third quarter Ocado Group shares decline as much as 11% after the online grocer reported 4Q retail sales that missed analyst estimates. Morgan Stanley said period performance was “disappointing” Philips falls as much as 5.6% after UBS cut the Dutch medical technology group to sell, describing a recent month-long rally as “unjustified,” and flagging downside risks to earnings Hugo Boss drops as much as 2.7% as Deustche Bank said a “mild” beat of 4Q consensus estimates failed to impress investors Asian stocks were mixed as investors assessed data on China’s economic growth and braced for the Bank of Japan’s key policy decision due Wednesday. The MSCI Asia Pacific Index was little changed as of 4:30p.m. Hong Kong time, as losses in financial shares offset an advance in consumer discretionary stocks. Hong Kong’s Hang Seng Index fell 0.8%, ending a four-day rally. Alibaba gained 1% after news that billionaire-investor Ryan Cohen has acquired a stake worth hundreds of millions of dollars in the second half of last year. China’s CSI 300 Index ended flat after a report showed the nation’s gross domestic product grew 3% in 2022, higher than economists expected. The market took a breather after three days of gains fueled by optimism over reopening and eased tech regulations.  “I believe that the market will welcome such numbers,” said Hao Hong, chief economist at Grow Investment Group, in a Bloomberg TV interview. Still, “if the property sector takes more time to recover, it will affect consumption as well. So this year is actually going to be more challenging than last year.”  Investors in Asia will also monitor speeches by several Federal Reserve officials this week, as well as comments by central bankers during the World Economic Forum’s annual meeting in Davos, Switzerland. Japanese stocks rose, ending a two-day loss, as investors adjusted positions before the Bank of Japan’s policy decision tomorrow. Although almost all economists polled by Bloomberg expect no change at the BOJ on Wednesday, some investors are bracing for more action as the central bank struggles to keep bond yields below its target.  The Topix Index rose 0.9% to 1,902.89 as of the market close in Tokyo, while the Nikkei 225 advanced 1.2% to 26,138.68. Toyota Motor contributed the most to the Topix’s gain, increasing 2.5%. Out of 2,161 stocks in the index, 1,570 rose and 474 fell, while 117 were unchanged Australian stocks dipped: the S&P/ASX 200 index closed slightly lower at 7,386.30, snapping four days of gains, as losses in mining and technology stocks weighed on the gauge.  Most markets across Asia fell as traders digested data that showed China’s economy growing at the second slowest pace since the 1970s.  In New Zealand, the S&P/NZX 50 index rose 0.6% to 11,881.00 India’s benchmark stock gauge posted its biggest advance in more than a week as Reliance Industries led gains among energy firms amid improving outlook for the sector. The S&P BSE Sensex rose 0.9% to 60,655.72 in Mumbai, its largest single-day jump since Jan. 9. The NSE Nifty 50 Index rallied by a similar measure. All but three of the 20 sector sub-gauges compiled by BSE Ltd. gained, led by capital goods makers. Reliance Industries gained 1.4%, after five-straight declines, to push the oil-and-gas sector gauge to an all-time high after the government lowered windfall tax on locally-produced crude and export of diesel.  Outlook for oil and gas companies has been improving as moderating crude prices allow state-run refiners to lower marketing losses while Reliance Industries benefits from higher margins.  The Bloomberg Dollar Index inched up 0.1% as the greenback traded higher against most of its Group-of-10 peers. Scandinavian currencies were the worst performers while the Swiss franc led G-10 gains. The pound gained and gilts slumped in the wake of UK labor data that showed wages rose at a near-record pace for the three months through November. Yields rose 5-7bps across the curve and traders also bolstered bets on the BOE’s peak rate The euro inched lower, but held above $1.08. Bunds eased across the curve and Italian bonds underperformed. Germany January ZEW investor expectations rose to 16.9 versus estimate -15.0 Japan’s benchmark yield briefly rose above the central bank’s ceiling for a third day as the Bank of Japan starts a two-day policy meeting. The yen fell for a second day. Most economists expect the BOJ to stand pat although market watchers don’t rule out an adjustment including another widening of the yield band to 0.75 or higher, or a scrapping of the yield curve control The Australian and New Zealand dollars reversed an Asia session gain amid broad-based dollar strengthening. Australia’s consumer confidence jumped 5%, the largest monthly gain since April 2021, aided by a temporary respite from interest-rate increase as the Reserve Bank’s board doesn’t meet this month In rates, the Treasury curve extended bear-steepening move after 30-year yields gap higher from the reopen after Monday’s US holiday. Treasury yields were cheaper by up to 7bp across long-end of the curve with 10-year note futures trading toward bottom of Monday’s range; 10-year yields around 3.56% and cheaper by ~5bp vs Friday’s close. Gilts weaker over London session after UK wages rise faster than forecast while European supply pressures also weigh on core rates.  Long-end-led losses in US curve steepen 2s10s, 5s30s cash spreads by 5bp and 4bp vs Friday’s close. UK and German government bonds fall with 10-year borrowing costs rising 6bps and 2bps respectively. In commodities, rose to session highs after earlier dropping  WTI rose 0.65% to trade above $80. Spot gold falls roughly $10 to trade near 1,906/oz. Bitcoin is essentially unchanged on the session and resides in particularly narrow sub-USD 400 parameters after last week's marked upside. To the day ahead now, and data releases include UK unemployment for November, the German ZEW survey for January, Canadian CPI for December, and the US Empire State manufacturing survey for January. Central bank speakers include the ECB’s Centeno and the Fed’s Williams. Finally, earnings releases include Goldman Sachs, Morgan Stanley and United Airlines. Market Snapshot S&P 500 futures down 0.3% to 4,007.75 MXAP little changed at 165.62 MXAPJ down 0.4% to 544.25 Nikkei up 1.2% to 26,138.68 Topix up 0.9% to 1,902.89 Hang Seng Index down 0.8% to 21,577.64 Shanghai Composite down 0.1% to 3,224.25 Sensex up 0.9% to 60,629.94 Australia S&P/ASX 200 little changed at 7,386.29 Kospi down 0.9% to 2,379.39 STOXX Europe 600 down 0.1% to 454.10 German 10Y yield little changed at 2.19% Euro little changed at $1.0822 Brent Futures up 0.4% to $84.78/bbl Gold spot down 0.4% to $1,908.36 U.S. Dollar Index up 0.17% to 102.38 Top Overnight News from Bloomberg ECB Governing Council member Mario Centeno said the euro-area economy is performing better than many anticipated in the face of record inflation and the energy crisis that erupted after Russia attacked Ukraine ECB Chief Economist Philip Lane said interest rates will have to move into “restrictive territory” to bring inflation back to target Investors are looking to bet against Italy’s peer-beating bond rally, saying the gains have gone too far. They argue the ECB is expected to keep hiking interest rates and is unlikely to stand in the way of a selloff given how narrow the spread over German bunds remains Investors are the most underweight on US equities since 2005 as improving market sentiment sends them flocking toward cheaper regions, according to Bank of America’s global fund manager survey Some 467,000 working days in the UK were lost to strikes in November, a 10-year high, after a wave of walkouts caused by the most severe cost-of-living crisis in a generation. Days lost over a six-month period reached the highest level since 1989-90 The BOJ’s policy decision due Wednesday is shaping up to be the biggest risk for the dollar-yen pair since the global financial crisis. The currency pair’s overnight implied volatility jumped as high as 54.4 vol, the highest since November 2008, as traders positioned for another policy tweak following a surprise move in December An arbitrage trade that rattled Japan’s bond market last year looks to be back. The spread between the prices on Japanese 10-year debt and similar-maturity futures has swelled in recent weeks, providing room for so-called basis trades that try to take advantage of the difference This year is pivotal for the Japanese economy to move away from decades of deflationary thinking toward sustained real wage growth, according to the head of the country’s largest labor union While China’s GDP grew 3% last year, the second-slowest pace since the 1970s, fourth- quarter and December data came in better than economists had expected China’s population started shrinking in 2022 for the first time in six decades, the latest milestone in a worsening demographic crisis for the world’s second-largest economy A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed in which most bourses lacked firm direction in the absence of a lead from the US due to MLK Jr. Day and despite the better-than-expected Chinese economic growth and activity data. ASX 200 was subdued with the index contained after it hit resistance at the 7,400 level, while an improvement in Westpac Consumer Confidence and an increase in Rio Tinto’s quarterly output did little to inspire trade. Nikkei 225 outperformed with strength in the auto sector driving the advances and as the BoJ kicked off its 2-day policy meeting with markets second-guessing what the central bank will decide regarding its ultra-easy policy. Hang Seng and Shanghai Comp were lacklustre despite encouraging data in which Chinese GDP, Industrial Production and Retail Sales figures all topped estimates. Nonetheless, the 3.0% growth for 2022 was much lower than the ‘abandoned’ target of around 5.5% and President Xi’s hint of at least 4.4% growth, while China also noted its population shrunk for the first time since 1961 and the death rate was the highest since 1974. Top Asian News PBoC injected CNY 205bln via 7-day reverse repos with the rate kept at 2.00% and injected CNY 301bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 504bln net injection. China's Customs said GDP grew 3.0% Y/Y in 2022 and that China was able to stabilise the economy, but added that the foundation for economic recovery is not solid yet, according to Reuters. China's stats bureau stated China's population in 2022 shrunk for the first time since 1961 and the death rate was the highest since 1974, although the stats bureau chief later noted they should not worry about China's population decline and overall labour supply still exceeds demand. The stats bureau chief also said that benign inflation in China will create room for macro policies and that the property sector's drag on economic growth this year will not be larger than in 2022, according to Reuters. European equities trade marginally lower following a mixed APAC lead, Euro Stoxx 50 -0.3%. Sectors in Europe are now mostly lower with no overall bias, but with Chemicals and Industrials outperforming and Autos and Energy towards the bottom. US equity futures are softer but off worse levels with the ES holding above 4,000 throughout the Tuesday session. Top European News ECB's Centeno says Q4 growth within Europe is likely to be positive. European Economy Commissioner Gentiloni says we have to strengthen competitiveness by streamlining state aid rules, have a good EU-US partnership; need to support competitiveness, not begin a subsidy war with the US. European Commission President von der Leyen says to avoid fragmenting the EU's single market and to support clean tech across the EU, EU has to step up finding; For medium term will prepare a European sovereignty fund but it will take time. Germany's BDI President says mild recessionary tendencies will predominate at the start of the year, sees upward trend; Economy expected to shrink by 0.3% in 2023; sees real 1% increase in export of goods and services this year (vs 1.5% global trade). FX A choppy Tuesday session thus far for the Dollar as the index matched yesterday’s 102.56 peak in APAC hours before waning towards the unchanged mark ahead of the European cash open. CNH is softer intraday despite supportive Chinese data overnight, which saw Q4 GDP, IP and Retail Sales top expectations across the board. USD/JPY is choppy in a 128.23-129.13 parameter, but within recent ranges, whilst the technical “death cross” is more evident as the 50 DMA (135.60) falls further below the 200 DMA (136.67). Mixed trade seen across both the EUR and GBP with the latter leading the way following the UK jobs data following strong wages metrics which subsequently lifted BoE market pricing for a 50bps hike (at the time) to around 72% from 63% pre-release. PBoC set USD/CNY mid-point at 6.7222 vs exp. 6.7234 (prev. 6.7135) Fixed Income Core benchmarks are downbeat after UK and German data, with USTs in tandem directionally but with magnitudes more contained ahead of Fed's Williams. Bunds and, post-open, Gilts printed session lows of 137.66 and 103.37 respectively post-UK jobs data, with the benchmarks nearing but not retesting these points after a particularly strong ZEW release. Following the UK jobs data, we have seen an uptick in BoE pricing for 50bp in February to a 75% probability from circa. 63% pre-release. Commodities WTI and Brent front-month futures diverge intraday on account of the US MLK holiday on Monday which resulted in no WTI settlement. WTI Feb holds onto a USD 79/bbl status whilst Brent trades on either side of USD 85/bbl in what has been a choppy session. Spot gold has been drifting lower as the Dollar remains firm, with the yellow metal trundling lower from highs of USD 1,919/oz down to around USD 1,905/oz. Base metals are softer across the board (but to varying degrees) despite the supportive Chinese data overnight as a firmer Dollar exerts pressure on the complex. China's state planner, NDRC is to lower retail prices of gasoline an diesel by CNY 205/tonne and CNY 195/tonne respectively as of January 18th. Radio Free Europe's Jozwiak writes "Review underway on the Russian oil price cap. Currently at USD 60 but I understand there is a good chance that it might be lowered a bit in upcoming weeks". OPEC Secretary General is very bullish on China, and cautiously optimistic on the global economy; Chinese demand will grow by 500k barrels this year; waiting to see what happens after China's New Year holiday (Jan 21st-29th). Geopolitics Russian Defence Ministry discussed increasing the number of military personnel to 1.5mln (vs ~1.3mln in 2022), according to Tass; says major changes in Russian army will take place from 2023-26. Ukrainian President Zelensky said the attack in Dnipro underscores the need for new and faster decisions on weapons supplies, while he added they expect key decisions from partners on arms supplies at the Ramstein meeting. Russian-installed Donetsk authorities confirm that Russia has control of Soledar, via Tass. Russia deployed an SU-27 fighter plane to escort a German naval aircraft over the Baltic, according to Interfax. Russian Kremlin when asked about a potential meeting between the CIA's Burns and Russia spy chief says "this kind of dialogue is beneficial". UK is reviewing whether to designate Iran’s Revolutionary Guards as a terrorist organisation, according to FT. China's Foreign Ministry spokesperson says they are discussing the details of a visit from US Secretary of State Blinken. Iran's IRGC have conducted "major drills" in the Persian Gulf, according to Tasnim; details light. US Event Calendar 08:30: Jan. Empire Manufacturing, est. -8.6, prior -11.2 Central Bank Speakers 15:00: Fed’s Williams Gives Welcoming Remarks DB's Jim Reid concludes the overnight wrap I hope you are all looking forward to the rest of the year now after Blue Monday was navigated yesterday, which flew hot on the heels of Friday 13th at the end of last week. To be fair markets of late haven't been either depressing or scary. However we took pause for breath yesterday, given the US holiday, with nothing much happening. The main news has instead been overnight, where we’ve just had the release of the Chinese GDP figures for Q4 that covers the December surge in Covid cases. The data was better than expected but still showed the scars from Covid. Q4 GDP (+2.9%) beat expectations (+1.6%) with the FY at +3% (+2.7% expected and +8.1% in 2021) - the second lowest year since China re-emerged from the economic wilderness in the 1970s. Momentum was much stronger than expected in December though. Retail sales dropped -1.8% y/y in December, much better than -9.0% fall expected by analysts and compared to a -5.9% decline in the prior month. Meanwhile, industrial production grew +1.3% y/y, well above the +0.1% predicted by Bloomberg. At the same time, fixed asset investment for 2022 rose by +5.1%, slightly above the +5% expected by Bloomberg. Asian markets are lower though led by the Hang Seng (-1.25%) followed by the KOSPI (-0.77%), the Shanghai Composite (-0.27%) and the CSI (-0.16%). Elsewhere, the Nikkei (+1.28%) is bucking the trend this morning, recouping some of the losses from the previous two sessions. In overnight trading, stock futures in the US are indicating a negative opening with contracts on the S&P 500 (-0.32%) and NASDAQ 100 (-0.54%) trading in the red. Meanwhile, yields on 10yr USTs (+2.95 bps) have edged higher to 3.53% after the holiday. Looking back at yesterday now, it was an incredibly uneventful session for the most part, even adjusting for the impact of the US holiday. For instance, if you look at US futures markets (since spot markets were closed), S&P 500 futures had barely budged by the time Europe went home, with a modest decline of -0.10%. It was a similar story for bonds, where futures also saw little change, perhaps in part since expectations of the Fed’s terminal rate for June moved up by just +0.002bps on the day. That said, despite the lack of excitement, the VIX index of volatility ticked up from its one-year low on Friday, moving up +1.14pts to 19.49pts. Back in Europe there wasn’t much happening either, but one trend to note was the continued decline in natural gas futures yesterday, which fell back to a 16-month low of €55.45 per megawatt-hour. Although these prices are still well above their historic norms, they’ve now come down by more than half in the last month, so this is a big and positive shock if it ends up being sustained. In turn, that led to a fresh decline in inflation expectations, and the 10yr German breakeven came down a further -2.9bps to a 3-month low of 2.05%. That greater optimism on the inflation side wasn’t enough to prevent a modest decline in sovereign bonds yesterday, with yields on 10yr bunds (+0.6bps), OATs (+0.6bps) and BTPs (+0.6bps) all seeing a small increase. Gilts were an underperformer, with 10yr yields up +1.8bps rise on the day as UK assets more broadly saw a slight underperformance. That came as BoE Governor Bailey testified before the Treasury Committee of MPs, where he warned that there was a risk that inflation wouldn’t drop as fast as expected. Overall however, there was nothing revelatory on how they’re thinking about the next decision on February 2. With the positive gas news boosting sentiment more broadly, European equities advanced for the most part. The STOXX 600 rose +0.46%, taking the index up to its highest level since April, with other advances for the FTSE 100 (+0.20%), the DAX (+0.31%) and the CAC 40 (+0.28%). That continues the very positive start to the year for European equities, and means that the YTD returns now stand at +7.00% for the STOXX 600 and +8.69% for the DAX. Finally, the World Economic Forum’s annual meeting at Davos opened last night, which will continue for the rest of the week. Numerous political and business leaders are gathering there, and today’s speakers include European Commission President Ursula Von der Leyen, Chinese Vice Premier Liu He, Spanish PM Pedro Sánchez and German finance minister Christian Lindner. Separately, it’s not actually a Davos meeting, but we heard yesterday that US Treasury Secretary Yellen and Chinese Vice Premier Liu He would be meeting in Zurich. To the day ahead now, and data releases include UK unemployment for November, the German ZEW survey for January, Canadian CPI for December, and the US Empire State manufacturing survey for January. Central bank speakers include the ECB’s Centeno and the Fed’s Williams. Finally, earnings releases include Goldman Sachs, Morgan Stanley and United Airlines. Tyler Durden Tue, 01/17/2023 - 07:36.....»»

Category: blogSource: zerohedgeJan 17th, 2023

Southwest Airlines CEO Bob Jordan takes responsibility for the company"s holiday flight meltdown: "It just can"t happen again"

The airlines canceled more than 16,700 flights between December 21 and 31 — which could cost up to $825 million in lost revenue and reimbursements. Southwest Airlines' CEO Bob Jordan is under pressure after recent operational failures at the carrier.Brendan McDermid/Reuters Southwest Airlines CEO Bob Jordan took responsibility for the recent holiday chaos, saying this "just can't happen again." The carrier has engaged Oliver Wyman to review the meltdown and GE to update its software. Shareholders filed a class action lawsuit on Thursday against Southwest over the flight disruptions. Southwest Airlines CEO Bob Jordan took responsibility for the carrier's operational meltdown over the recent holiday season, and pledged to prevent a recurrence of the chaos."There are a lot of reasons that this happened, but it's on me at the end of the day," Jordan said in an interview with Reuters on Thursday. "It's on me to not let this happen again and to rebuild trust with our employees and rebuild trust with our customers, and we will do exactly that.""I have put everything on the table here because it just can't happen again," Jordan told Reuters.Southwest canceled more than 16,700 flights between December 21 and 31 as the busy holiday travel season collided with a major winter storm, an outdated scheduling system, and an unconventional flight structure. The Dallas-based carrier estimated the meltdown in December will cost the airline up to $825 million, including lost revenue and passenger reimbursements. The carrier expects to post a net loss for the fourth quarter.Southwest has engaged consultancy Oliver Wyman to investigate the operational failures and has set up a new committee to review its operations, Jordan told Reuters. General Electric is also helping Southwest update its software.GE told Reuters on Thursday the software "performed as designed" during the widespread disruptions, but it's working with Southwest to "define new functionality as they improve their crew rescheduling capability."On Thursday, a group of shareholders filed a class action lawsuit against Southwest over the flight disruptions. In a filing seen by Insider, the shareholders — led by Arthur Teroganesian — alleged Southwest made false or misleading statements that ignored the risks of having outdated technology, and about its unique flight structure.Southwest's review of the disruptions came as shareholders demand answers for the disruptions.New York State Comptroller Thomas DiNapoli last Friday demanded to know how the carrier plans to prevent another operational meltdown. The New York state pension fund is one of the top-100 largest investors in Southwest."Clearly this crisis has resulted in profound customer dissatisfaction and is expected to generate significant costs to the company," DiNapoli told Southwest's Jordan in a letter seen by Insider. In the letter, DiNapoli also asked the carrier how it plans to "correct these failures - not just in the immediate term, but for the coming years."Southwest Airlines and GE did not immediately respond to Insider's request for comment sent outside regular business hours.Read the original article on Business Insider.....»»

Category: smallbizSource: nytJan 13th, 2023

Simulations Plus (SLP) Announces $20M Accelerated Buyback Plan

The ASR is a part of earlier announced (December 2022) $50 million share repurchase plan by Simulations Plus (SLP). Simulations Plus SLP recently announced that it has inked an accelerated share repurchase (ASR) agreement with Morgan Stanley & Co. LLC. to buy back its common stock worth $20 million. The ASR will be funded by using the available cash balances.According to the ASR agreement, Simulations Plus will pay initially $20 million to Morgan Stanley and will receive an initial share delivery of nearly 409,000 shares. The final settlement (inclusive of any additional share delivery) is expected to occur during or before the third quarter of fiscal 2023, added Simulations Plus.The ASR is a part of the company’s earlier announced (December 2022) $50 million share repurchase authorization. Following the execution of ASR, the company will have $30 million worth shares left under its existing buyback program.Simulations Plus, Inc. Price and Consensus  Simulations Plus, Inc. price-consensus-chart | Simulations Plus, Inc. Quote Headquartered in Lancaster, CA, Simulations Plus develops drug discovery and development simulation software, which is licensed to and used in the conduct of drug research by major pharmaceutical and biotechnology companies worldwide.The company recently reported first-quarter fiscal 2023 results wherein earnings of 6 cents per share, declined 60% on a year-over-year basis. The figure missed the Zacks Consensus Estimate by 50%.Revenues of $12 million decreased 4% year over year, affected by lower revenues in Software business segment. The top line missed the Zacks Consensus Estimate by 3.8%. Revenues from Software (51% of the total quarterly revenues) declined 17% year over year to $6.1 million due to changes in renewal pattern and shift in revenue seasonality.However, Services’ revenues (49% of total quarterly revenues) improved 17% to $5.9 million. Services’ backlog was $16 million at the end of the reported quarter, up 6.7% year over year.For fiscal 2023, SLP expects revenue growth of 10-15% year over year and in the range of $59.3-$62 million. For the fiscal year, the company expects Software to consist 60-65% of revenues and Services to consist 35-40% of revenues. The company expects earnings per share to increase in the band of 5-10%.Currently, SLP carries a Zacks Rank #3 (Hold). Shares of the company have declined 16.5% compared with sub-industry’s decline of 24.1%.Image Source: Zacks Investment ResearchStocks to ConsiderSome better-ranked stocks from the broader technology space are Arista Networks ANET, Jabil JBL and Asure Software ASUR. While Arista and Jabil sport a Zacks Rank #1 (Strong Buy), Asure carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.37 per share, up 0.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have declined 11.3% in the past year.The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.31 per share, rising 1.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL are up 7.2% in the past year.The Zacks Consensus Estimate for Asure Software’s 2022 earnings is pegged at 7 cents per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 23%.Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 83.3%. Shares of ASUR have soared 38.7% in the past year. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Jabil, Inc. (JBL): Free Stock Analysis Report Simulations Plus, Inc. (SLP): Free Stock Analysis Report Asure Software Inc (ASUR): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 12th, 2023

Aircastle Announces Third Quarter 2022 Results, Strong Gains on Sales

Highlights for the Three Months Ended November 30, 2022 Total revenues of $258 million Adjusted EBITDA(1) of $240 million Net income of $50 million Acquired seven narrow-body aircraft for $298 million, six of which were new technology aircraft Sold eight aircraft and other flight equipment, including two 747 Freighters and one 777, for proceeds of $163 million and a gain on sale of $53 million $24 million of Russia-related letters of credit received 27% increase in year-to-date cash flows from operations Liquidity Entered into a new $450 million secured aircraft financing facility. Total liquidity as of January 6, 2023 of $2.3 billion includes $1.7 billion of undrawn facilities, $0.4 billion of projected adjusted operating cash flows through January 1, 2024, $0.1 billion of contracted asset sales, and $0.1 billion of unrestricted cash 209 unencumbered aircraft with a net book value of $5.5 billion STAMFORD, Conn., Jan. 12, 2023 /PRNewswire/ -- Mike Inglese, Aircastle's Chief Executive Officer, commented, "Sustained demand for travel has been progressing into 2023 with a generally profitable outlook as airlines deftly manage through economic disruptions. In the third quarter, Aircastle continued our trading momentum with seven narrow-body acquisitions, six of which further grow our fleet of in-demand, new technology aircraft. On the financing front, we bolstered our conservative debt profile with a $450 million secured aircraft financing facility." Mr. Inglese concluded, "Our strategic new acquisitions and profitable sales this quarter are strong indications that aircraft leasing remains resilient and robust. While funding challenges are felt across the sector, we remain optimistic because of our favorable credit rating, along with the opportunities afforded by our unique ownership arrangement with the Marubeni Corporation and Mizuho Leasing. With Aircastle's deep team of solutions-focused aviation experts, we look forward to disciplined future growth." (1)  Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers. Aviation Assets As of November 30, 2022, Aircastle owned 241 aircraft and other flight equipment having a net book value of $6.6 billion.  We also manage nine aircraft with a net book value of $289 million on behalf of our joint venture with Mizuho Leasing. Owned Aircraft As of November 30,  2022(1)   As of November 30,  2021 Net Book Value of Flight Equipment ($ mils.) $           6,571 $           6,734 Net Book Value of Unencumbered Flight Equipment ($ mils.) $           5,480 $           5,619 Number of Aircraft(1) 241 255 Number of Unencumbered Aircraft 209 223 Number of Lessees 76 79 Number of Countries 46 43 Weighted Average Fleet Age (Years)(2) 10.0 10.6 Weighted Average Remaining Lease Term (Years)(2) 5.1 4.8 Weighted Average Fleet Utilization for the three months ended(3) 94.4 % 94.0 % Weighted Average Fleet Utilization for the nine months ended(3) 94.6 % 93.7 % Managed Aircraft on behalf of Joint Ventures Net Book Value of Flight Equipment ($ mils.) $              289 $              302 Number of Aircraft 9 9 _______________ (1) Excludes nine aircraft that remain in Russia with zero net book value – see Note 3 in the Notes to Unaudited Consolidated Financial Statements. (2) Weighted by net book value (flight equipment held for lease and net investment in direct financing and sales-type leases, or "Net Book Value"). (3) Aircraft on-lease days as a percent of total days in period weighted by Net Book Value. Conference Call In connection with this press release, management will host a conference call on Thursday, January 12, 2023, at 9:00 A.M. Eastern Time.  All interested parties are welcome to participate on the live call.  The conference call can be accessed by dialing (877) 870-4263 (from within the U.S. and Canada) or (412) 317-0790 (outside the U.S. and Canada) ten minutes prior to the scheduled start. Please reference our company name "Aircastle" when prompted by the operator. A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com.  Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast.  For those who are not available to listen to the live call, a replay will be available on Aircastle's website shortly after the live call. About Aircastle Limited Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world.  As of November 30, 2022, Aircastle owned and managed on behalf of its joint ventures 250 aircraft leased to 76 customers located in 46 countries. Safe Harbor All statements in this press release, other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995.  Examples of forward-looking statements include, but are not necessarily limited to, statements relating to our proposed public offering of notes and our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA and Adjusted EBITDA and the global aviation industry and aircraft leasing sector. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements.  These statements are based on our historical performance and that of our subsidiaries and on our current plans, estimates and expectations and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained.  Accordingly, you should not place undue reliance on any such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this press release.  These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle's filings with the SEC and previously disclosed under "Risk Factors" in Item 1A of Aircastle's most recent Form 10-K and any subsequent filings with the SEC.  In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements.  Such forward-looking statements speak only as of the date of this press release.  Aircastle expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.   Aircastle Limited and SubsidiariesConsolidated Balance Sheets(Dollars in thousands, except share data) November 30,2022 February 28,2022 (Unaudited) ASSETS Cash and cash equivalents $        208,208 $        167,891 Restricted cash and cash equivalents — 2,791 Accounts receivable 39,087 63,666 Flight equipment held for lease, net 6,445,141 6,313,950 Net investment in leases, net 125,504 150,325 Unconsolidated equity method investment 40,097 38,317 Other assets 328,978 356,326 Total assets $     7,187,015 $     7,093,266 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Borrowings from secured financings, net $        656,032 $        684,039 Borrowings from unsecured financings, net 3,842,816 3,835,841 Accounts payable, accrued expenses and other liabilities 208,273 177,424 Lease rentals received in advance 52,688 37,361 Security deposits 64,856 69,189 Maintenance payments 494,058 459,713 Total liabilities 5,318,723.....»»

Category: earningsSource: benzingaJan 12th, 2023

FAA orders airlines to pause domestic US flights amid a system outage

The Federal Aviation Administration (FAA) has ordered airlines to pause all domestic departures until 9 a.m. Eastern Time. The FAA has suffered a system outage.Justin Sullivan / Staff / Getty The FAA has ordered airlines to pause their domestic departures after a system outage. The FAA said it expects departures to resume at 9 a.m. Eastern Time. The White House press secretary said President Biden had been briefed on the outage. The Federal Aviation Administration (FAA) has ordered airlines to pause their domestic departures from the US until 9 a.m. Eastern Time.The FAA is experiencing an issue with its Notice to Air Missions (NOTAM) system, leading to flight delays and cancellations.The agency said in a statement: "The FAA is still working to fully restore the Notice to Air Missions system following an outage."The FAA has ordered airlines to pause all domestic departures until 9 a.m. Eastern Time to allow the agency to validate the integrity of flight and safety information."United Airlines confirmed in a statement shared on social media that they had "temporarily delayed all domestic flights."The temporary ground stop excludes military and medevac flights, per an FAA update.The agency said in a statement that departures had already resumed at Newark Liberty and Atlanta Hartsfield-Jackson airport due to air traffic congestion.The White House press secretary, Karine Jean-Pierre, said President Biden had been briefed by the secretary of transportation on the outage. Jean-Pierre added that there is no evidence of a cyberattack at this point, but the president directed DOT to conduct a full investigation into the causes. This is a developing story. Please check back for updates ...Read the original article on Business Insider.....»»

Category: smallbizSource: nytJan 11th, 2023

NII to Support Wells Fargo (WFC) Q4 Earnings, Mortgage to Hurt

Higher interest rates and decent loan demand are expected to have aided Wells Fargo's (WFC) Q4 earnings amid dismal mortgage business and higher provisions. Wells Fargo & Company WFC is scheduled to report fourth-quarter and full-year 2022 results on Jan 13, before the opening bell. The company’s quarterly earnings and revenues are expected to have declined year over year.In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate on robust growth in net interest income and solid average loan growth. Yet, dismal non-interest income, higher provisions and muted mortgage business were the major undermining factors. Also, the rise in non-interest expenses acted as a headwind.Over the trailing four quarters, Wells Fargo’s earnings surpassed the consensus estimate on three occasions and missed once, the surprise being 12.66%, on average. Wells Fargo & Company Price and EPS Surprise Wells Fargo & Company price-eps-surprise | Wells Fargo & Company QuoteBefore we proceed further and check out the factors likely to have impacted the WFC’s quarterly performance, let’s discuss the latest enforcement action faced by it. In December 2022, the company was ordered by the CFPB to pay more than $2 billion in redress to consumers and a $1.7-billion civil penalty for the widespread mismanagement of auto loans, mortgages and deposit accounts. The company expects its operating losses expense, which is included in its non-interest expenses, will be roughly $3.5 billion for the to-be-reported quarter.Now, let’s take a look at the other factors that are expected to have influenced Wells Fargo’s fourth-quarter earnings.Loans and Net Interest Income (NII): While lending activity continued to improve in the fourth quarter, the pace of loan growth across most categories slowed as the quarter progressed. Per the Fed’s latest data, demand for commercial and industrial loans, real estate loans (specifically commercial real estate loans) and consumer loans accelerated in October and November.Also, in the fourth quarter, the Fed hiked interest rates by 125 basis points, resulting in a policy rate of 4.25-4.50%, the highest level in the past 15 years. Driven by decent loan growth and interest rate hikes, Wells Fargo is expected to have witnessed a robust improvement in earning asset yields, margin and NII in the quarter.Amid the considerations, the Zacks Consensus Estimate for Wells Fargo’s NII is pegged at $12.97 billion, suggesting a 7.2% rise from the prior quarter’s reported figure.Management expects NII to be $12.9 billion in the fourth quarter. Moreover, NII is projected to grow 24% in 2022.Mortgage Banking Revenues: Mortgage originations, both purchase and refinancing, continued the downtrend in the fourth quarter. Mortgage banking revenues have been facing tough comps from the prior year propelled by low mortgage rates.Also, in the fourth quarter, mortgage rates continued to rise, with the rate on the 30-year fixed mortgage remaining above the 6% mark throughout the period. The climb in mortgage rates, which kept the home buyers on the sidelines, led to a smaller origination market. Hence, being one of the largest bank mortgage lenders in the United States, WFC is likely to have continued seeing declines in its home lending portfolio and mortgage banking income.The Zacks Consensus Estimate for Wells Fargo’s mortgage banking revenues is pegged at $298 million for the fourth quarter, suggesting an 8% fall on a sequential basis.Overall Non-Interest Revenues: Wells Fargo’s investment advisory and other asset-based fee revenues are likely to have borne the brunt of the lag effect from weaker equity and fixed-income market performance in the third quarter. A dip in market valuations and lower transactional activity are expected to have been headwinds too.Further, the company is expected to have seen lower deposit-related fees, reflecting the implementation of overdraft policy changes and fee waivers. The consensus mark for the same is pegged at $1.25 billion, implying a sequential decrease of 3.3%.Raging inflation, equity market rout and fears of recession resulted in disappointing equity market performance. Thus, the IPOs and follow-up equity issuances dried up. Also, bond issuances are likely to have been muted. While global deal-making hit a record low for the fourth consecutive quarter, Wells Fargo is expected to have fared decently on the M&A front. Accordingly, the consensus mark for investment banking fees is pegged at $376 million, implying a marginal sequential increase.The Zacks Consensus Estimate for Wells Fargo’s total non-interest income is pegged at $6.97 billion, suggesting a 5.9% decline from the prior quarter’s reported number.Expenses: Wells Fargo’s costs are expected to have continued to flare up in the fourth quarter, given its franchise investments in technology and digitalization efforts. Additionally, amid the rising inflation, salary expenses are anticipated to have led to elevated non-interest expenses.Apart from these, the above-mentioned regulatory settlement is expected to have resulted in higher expenses during the to-be-reported quarter.Asset Quality: With loan growth, expectations of a worsening macroeconomic outlook and growing recession risk, Wells Fargo is expected to have continued building reserves in the fourth quarter.The Zacks Consensus Estimate for non-performing assets of $5.78 billion implies a 1.1% increase sequentially. Likewise, the consensus estimate for total non-accrual loans stands at $5.7 billion, reflecting a 2% rise.What Our Model PredictsOur proven model doesn’t conclusively predict an earnings beat for WFC this time around. This is because the company does not have the right combination of the two key ingredients — positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Earnings ESP: The Earnings ESP for Wells Fargo is 0.00%.Zacks Rank: WFC currently carries a Zacks Rank of 3.The Zacks Consensus Estimate for fourth-quarter earnings has been cut to half over the past month to 64 cents. Also, it suggests a year-over-year decline of 53.6%.Also, the consensus estimate of $19.79 billion for quarterly revenues indicates a 5.1% fall from the prior-year quarter’s reported number.Banks That Warrant a LookHere are a couple of bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:The Earnings ESP for The Bank of New York Mellon Corporation BK is +6.31% and it carries a Zacks Rank #3, at present. The company is slated to report fourth-quarter and full-year 2022 results on Jan 13.Over the past seven days, BK’s Zacks Consensus Estimate for quarterly earnings has moved 3.5% north.First Republic Bank FRC is scheduled to release fourth-quarter and full-year 2022 earnings on Jan 13. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +0.25%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.FRC’s quarterly earnings estimates have moved marginally lower over the past week.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Wells Fargo & Company (WFC): Free Stock Analysis Report The Bank of New York Mellon Corporation (BK): Free Stock Analysis Report First Republic Bank (FRC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 10th, 2023

Eagle Pharmaceuticals Provides Business Update and Guidance for 2023

WOODCLIFF LAKE, N.J., Jan. 10, 2023 (GLOBE NEWSWIRE) -- Eagle Pharmaceuticals, Inc. (NASDAQ:EGRX) ("Eagle" or the "Company") today provided a business update and guidance for 2023. Highlights: During the 12 months ended September 30, 2022, Eagle recorded net income of $21.3 million or $1.63 per diluted share and adjusted EBITDA of $125.6 million and non-GAAP earnings per diluted share of $7.54, a significant increase from 2021.1 Eagle exited 2022 with an approximate 6%2 share of the commercial segment of the pemetrexed market for its PEMFEXY® product, equating to approximately $8 million per quarter in revenue3, and anticipates doubling its share by the end of Q1 2023. The Company bought down future royalties on PEMFEXY profits in exchange for a one-time payment of $15 million.4 Expects U.S. bendamustine franchise decline to be manageable, maintaining approximately 75% of the gross profit in 2023. Q4 2022 expiration of development partner royalty on the bendamustine franchise profits (BENDEKA®, BELRAPZO® & TREAKISYM®), representing approximately 10% of such profits. Preliminary 2023 Guidance Adjusted EBITDA of $74.0-$80.0 million5 Adjusted non-GAAP earnings per share of $4.20-$4.536 Adjusted non-GAAP R&D expense of $41.0-$45.0 million7 Improved Margins and Contribution for Key Products The Company continues to evolve with a more diversified revenue stream U.S. bendamustine revenue as a percentage of total revenue projected to decline, while maintaining approximately 75% of gross profit in 2023 Expected increase in PEMFEXY sales from 2022 to 2023 Eagle exited 2022 with an approximate 6% share of the commercial segment of the pemetrexed market, equating to approximately $8 million per quarter in revenue Anticipates doubling share by end of Q1 2023 Company values this segment at approximately $550 million annually at expected pricing8,9 Elimination/expiration of royalties paid Q4 2022 expiration of development partner royalty on bendamustine franchise profits (BENDEKA, BELRAPZO & TREAKISYM) representing approximately 10% of profits historically Bought down future royalties on PEMFEXY profits in exchange for one-time payment of $15 million10 Includes elimination of 25% royalty on next $85 million in profit Reduction in rates on subsequent profits "Our path to achieving our projected earnings per share range of $4.20 to $4.53 for 2023 is based on several key drivers. First, we anticipate higher PEMFEXY sales in 2023 than we had last year, and we also reduced future royalties related to PEMFEXY profits from 25% to a range of 0% to 12.5% based on aggregate profits achieved in exchange for a one-time payment of $15 million. In addition, we expect the 2023 decline in bendamustine to be manageable, and the 10% royalty on bendamustine products no longer applies. We also remain enthusiastic about the commercial potential of our two newest hospital-based products, Barhemsys® and Byfavo®. These efforts, together with our intention to further expand the Company, including M&A, lead us to believe that Eagle is poised for another year of strong earnings growth and profitability in 2023," stated Scott Tarriff, President and Chief Executive Officer of Eagle Pharmaceuticals. Commercial and Pipeline Update Product portfolio Acute Care Hospital: RYANODEX®, vasopressin, Barhemsys®, Byfavo® Oncology: BENDEKA, BELRAPZO, PEMFEXY11, TREAKISYM Japan12 75-person commercial team covers all products excluding BENDEKA and TREAKISYM Company projects growth in earnings while still supporting R&D Cash flow from legacy products expected to continue to fund R&D and partnerships for branded pipeline, including: Landiolol13: NDA under review by FDA CAL0214: Global Phase 2 study underway with 276 expected patients in 120 centers expected in 22 countries Enalare's ENA-00115: Fast-track status for post-operative respiratory depression—Enalare expects to start fentanyl toxicology study in early 2023 and expects Phase 2 enrollment as early as Q3 2023 BARDA16 (award to Enalare worth up to $50 million to advance intramuscular formulation) and NIH funding for community drug overdose—expect Phase 1 enrollment mid-2023 Rare Pediatric Disease and Orphan Drug designations for apnea of prematurity—Enalare completed animal proof of concept; designing next set of animal studies and clinical pathway About Eagle Pharmaceuticals, Inc. Eagle is a fully integrated pharmaceutical company with research and development, clinical, manufacturing and commercial expertise. Eagle is committed to developing innovative medicines that result in meaningful improvements in patients' lives. Eagle's commercialized products include vasopressin, PEMFEXY®, RYANODEX®, BENDEKA®, BELRAPZO®, TREAKISYM® (Japan), and BYFAVO® and BARHEMSYS® through its wholly owned subsidiary Acacia Pharma Inc. Eagle's oncology and CNS/metabolic critical care pipeline includes product candidates with the potential to address underserved therapeutic areas across multiple disease states. Additional information is available on Eagle's website at www.eagleus.com. Non-GAAP Financial Performance Measures In addition to financial information prepared in accordance with U.S. GAAP, this press release also contains adjusted EBITDA and adjusted non-GAAP earnings per share attributable to Eagle and projected adjusted non-GAAP R&D expense, adjusted EBITDA and adjusted non-GAAP earnings per share. The Company believes these measures provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods and with respect to projected information. Adjusted EBITDA excludes items such as interest expense, interest income, income tax provision, depreciation expense, amortization expense, stock-based compensation expense, fair value adjustments on equity investment, expense of acquired in-process research and development, convertible promissory note related credit losses, fair value adjustments related to derivative instrument, restructuring charges, expense related to collaboration with TYME, and severance. Adjusted non-GAAP earnings per share information excludes items such as amortization expense, stock-based compensation expense, depreciation expense, expense of acquired in-process research & development, severance, acquisition related costs, legal settlement, non-cash interest expense, fair value adjustments on equity investment, convertible promissory note related adjustments, fair value adjustments related to derivative instruments, foreign currency exchange loss, restructuring charges, inventory step-up and the tax effect of these adjustments. Adjusted non-GAAP R&D expense excludes items such as stock-based compensation expense, depreciation expense, restructuring charges, severance and expense of acquire in-process research & development. The Company believes the use of non-GAAP financial measures helps indicate underlying trends in the Company's business and are important in comparing current results with prior period results and understanding projected operating performance. Non-GAAP financial measures provide the Company and its investors with an indication of the Company's baseline performance before items that are considered by the Company not to be reflective of the Company's ongoing results. Investors should note that reconciliations of the forward-looking or projected non-GAAP financial measures included in this presentation to their most comparable GAAP financial measures cannot be provided because the Company cannot do so without unreasonable efforts due to the unavailability of information needed to calculate the reconciling items and the variability, complexity, and limited visibility of comparable GAAP measures, and the reconciling items that would be excluded from the non-GAAP financial measures in the future. Likewise, the Company is unable to provide projected GAAP financial measures. GAAP projections and reconciliations of the components of projected adjusted non-GAAP R&D expense, adjusted EBITDA and adjusted non-GAAP earnings per share to their most comparable GAAP financial measures are not provided because the quantification of projected GAAP R&D expense, GAAP net income and GAAP earnings per share and the reconciling items between projected GAAP to projected adjusted non-GAAP R&D expense, adjusted EBITDA and adjusted non-GAAP earnings per share cannot be reasonably calculated or predicted at this time without unreasonable efforts. For example, with respect to each of GAAP R&D expense, GAAP net income and GAAP earnings per share, the Company is not able to calculate the favorable or unfavorable expenses related to the fair value adjustments on equity investments and derivative instruments primarily due to nature of these transactions. Such unavailable information could be significant such that actual GAAP R&D expense, GAAP net income and GAAP earnings per share would vary significantly from projected adjusted non-GAAP R&D expense, adjusted EBITDA and adjusted non-GAAP earnings per share. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with U.S. GAAP. The Company strongly encourages investors to review its consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP financial measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and other securities law. Forward-looking statements are statements that are not historical facts. Words and phrases such as "anticipate," "forward," "will," "would," ‘could," "should," "may," "remain," "maintain," "opportunity," "potential," "prepare," "expect," "believe," "plan," "future," "belief," "guidance," "estimate," "project," "forecast" "continue," "further" and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, statements with respect to: Eagle Pharmaceuticals, Inc.'s ("Eagle" or the "Company") ability to achieve earnings growth and support research and development, and its capability for further expansion and improve margin and contribution of key products; expectations with respect to the Company's financial results, including projected estimated financial information, including projected adjusted EBITDA, non-GAAP earnings per share and research and development expense for fiscal year 2023 and expectations with respect anticipated future product revenue and profits for fiscal years 2022 and 2023, including projected estimated mix of product revenue and profits; expectations with respect to potential exit run rates, potential revenues, potential market share, potential commercial opportunity, expected pricing of drugs and future royalties; expectations with respect to Enalare, including any potential further investments by Eagle in Enalare, including the potential exercise of Eagle's option to acquire the outstanding shares of Enalare upon the achievement of certain milestones, Enalare's development programs and expectations with respect to the achievement of milestones by Enalare, including the timing thereof; the Company's development programs, products and pipeline; the potential for the Company to transition into a diversified pharmaceutical company with a portfolio of branded, first-in-class assets and to utilize legacy products; the Company's clinical development plan for its product candidates, including the number and timing of development initiatives or new indications for the Company's product candidates; the development of, potential therapeutic and economic benefits of and expected regulatory activities and matters with respect to the product candidates of the Company and Enalare; potential commercial opportunities, addressable markets, patient populations and settings for the Company's and Enalare's products and product candidates; CAL02's ability to neutralize virulence factors produced by bacteria that are commonly associated severe pneumonia; the potential of CAL02 to be a first-in-class broad-spectrum anti-virulence agent for the treatment of severe community-acquired bacterial pneumonia; the Company's expectations for the design and timing of the CAL02 Phase 2 study, including with respect to enrollment and the timing thereof; the potential of landiolol's to provide short-term reduction of ventricular rate in patients with supraventricular tachycardia, including atrial fibrillation and atrial flutter and potential for regulatory approval; the timeline for the fentanyl toxicology study, initiation of Phase 2 enrollment and availability of Phase 2 topline data for ENA-001 in post-op respiratory depression; the Company and Enalare's expectations for the design, enrollment and timing of the planned Phase 1 community drug overdose study for ENA-001; the design of future animal studies and clinical pathway for ENA-001 for apnea of prematurity; the Company's marketing, product development, partnering and growth strategy, including relating to the commercialization of Barhemsys and Byfavo and its other products; expectations with respect to the Company's ability to potentially acquire additional assets; the timing, scope or likelihood and timing of regulatory filings and approvals from the FDA for product candidates and the ability to maintain regulatory approval of products and product candidates; clinical development plans for product candidates; the success of the Company's collaborations with its strategic partners and the timing and results of these partners' preclinical studies and clinical trials, and the Company's potential earnings potential through such collaborations; the Company's plans and ability to advance the product candidate in its pipeline; potential opportunities for, and the Company's ability to complete, business development transactions, in a timely manner, on favorable terms to the Company, or at all; the sufficiency of the Company's cash flows and capital resources and expectations with respect to deployment of cash resources; and the Company's ability to achieve expected future financial performance and results. All of such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the Company's control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Such risks and uncertainties include, but are not limited to: the risk that the anticipated benefits of the Company's transaction with Acacia are not realized; the ability of Enalare to achieve milestones and deliverables and achieve successful results in the development of ENA-001; the impacts ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzingaJan 10th, 2023

Toll Brothers (TOL) Up 4.8% Since Last Earnings Report: Can It Continue?

Toll Brothers (TOL) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. A month has gone by since the last earnings report for Toll Brothers (TOL). Shares have added about 4.8% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Toll Brothers due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Toll Brothers (TOL) Q4 Earnings & Revenues Top, Up Y/YToll Brothers, Inc. reported fourth-quarter fiscal 2022 (ended Oct 31, 2022). Both the top and bottom lines topped the Zacks Consensus Estimate and the company delivered strong quarterly earnings and improved gross margin during the quarter despite the ongoing challenges in the industry. However, the homebuilder continues to grapple with a softer demand environment, given the dramatic increase in mortgage rates since March 2022.Looking forward, Douglas C. Yearley, Jr., chairman and chief executive officer, said, “Despite the softer market, FY 2023 is positioned to be another solid, high-margin year for us because of our strong backlog of 8,098 homes valued at $8.9 billion at fiscal year end. We are projecting an adjusted gross margin of 27.0% and earnings per share of $8.00 to $9.00 in FY 2023. This would increase our book value per share to above $60 at fiscal year-end 2023.” He further added, “As a primarily build-to-order home builder, we are strategically balancing the delivery of our large, high-margin backlog in FY 2023 with the generation of new sales for future deliveries.”Earnings & Revenue DiscussionThis Fort Washington, PA-based homebuilder reported adjusted earnings of $4.67 per share (after adjusting for after-tax settlement benefit related to a natural gas leak that occurred in Southern California in late 2015), which beat the Zacks Consensus Estimate of $3.88 by 20.4% and increased 54.6% from the year-ago period.Total revenues (including Home sales and Land sales and others) came in at $3.71 billion, which beat the consensus mark of $3.22 billion by 15.4% and rose 22.1% year over year. The uptrend was backed by higher deliveries and pricing during the quarter.Inside the HeadlinesToll Brothers now operates under five reportable segments, namely, North, Mid-Atlantic, South, Mountain and Pacific. Notably, during the earnings call, the company concluded that  City Living operations no longer meet the definition of an operating segment, primarily due to the change in structure and a shift in strategy for its operations. Therefore, reported figures of the prior periods have been reclassified to conform to the fiscal 2022 presentation. The change did not have any impact on its consolidated financial operations, earnings per share or cash flows for the periods presented.The company’s total home sales revenues grew 21.4% from the prior-year quarter to $3.58 billion. Homes delivered grew 12.7% year over year to 3,765 units. Deliveries increased across all the geographic regions served by the company baring North and Mid-Atlantic. The average price of homes delivered was $951,100 for the quarter, up from the year-ago level of $883,100.The number of net signed contracts for the reported quarter was 1,186 units, down 59.9% year over year. The value of net signed contracts was $1.32 billion, reflecting a decrease from the year-ago level of $3 billion.At the fiscal 2022-end, Toll Brothers had a backlog of 8,098 homes, representing a year-over-year decrease from 10,302 units in fiscal 2021. Also, potential revenues from backlog declined year over year to $8.87 billion from $9.50 billion reported in fiscal 2021. The average price of homes in backlog totaled $1,095,800, up from $922,100 at the end of fiscal 2021.The cancelation rate (as a percentage of signed contracts) for the reported quarter was 20.8% compared with 4.6% in the prior-year period.MarginsThe company’s adjusted home sales gross margin was 29%, expanding 310 basis points for the quarter. SG&A expenses — as a percentage of home sales revenues — were 7.7%, which decreased from 8.8% in the year-ago quarter.Fiscal 2022 HighlightsTotal revenues of $10.3 billion increased 16.9% from $8.8 billion in fiscal 2021. Earnings of $10.90 per share increased from $6.63 per share a year ago. Adjusted home sale gross margin also improved to 27.5% from 25% in fiscal 2021. Home deliveries grew to 10,515 units from 9,986 units a year ago. Average sale price per unit increased to $923,600 from $844,400 a year ago.FinancialsToll Brothers had cash and cash equivalents of $1,346.8 million at the fiscal 2022-end compared with $1,638.5 million at the fiscal 2021-end. At the fiscal 2022-end, it had $1.8 billion available under the $1.9 billion bank revolving credit facility, scheduled to mature in November 2026.Total debt at the fiscal 2022-end was $3.33 billion, down from $3.56 billion at the fiscal 2021-end. Debt to capital was 35.7% at the fiscal fourth-quarter end versus 37.5% at fiscal third-quarter 2022 and 40.2% at 2021-end. During the quarter, the company repurchased 3.7 million shares of its common stock at an average price of $42.45 per share for approximately $158.9 million.Fiscal First-Quarter GuidanceToll Brothers expects home deliveries of 1,750-1,850 units (indicating a decrease from 1,929 units delivered in the prior-year quarter) at an average price of $950,000-$970,000 (suggesting a rise from $874,700 a year ago).Adjusted home sales gross margin is expected to be 27%, implying an increase from 25.6% in the year-ago period. SG&A expenses are estimated to be 13.5% of home sales revenues, indicating a rise from 13.4% in the year-ago period. The company expects the effective tax rate to be 26%.Fiscal 2023 GuidanceFor fiscal 2023, home deliveries are anticipated to be 8,000-9,000 units at an average price of $965,000-$985,000. Toll Brothers expects an adjusted home sales gross margin of 27% compared with 27.5% reported in fiscal 2021. SG&A expenses, as a percentage of home sales revenues, for fiscal 2023 are projected to be 11.3% versus 10.1% reported in fiscal 2022.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed an upward trend in fresh estimates.The consensus estimate has shifted 19.03% due to these changes.VGM ScoresCurrently, Toll Brothers has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Toll Brothers has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Toll Brothers Inc. (TOL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 5th, 2023

Futures Rise Ahead Of Jobs Data, Oil Rebounds

Futures Rise Ahead Of Jobs Data, Oil Rebounds US stock-index futures were steady on Thursday, recovering from earlier losses as investors brushed off mostly hawkish commentary from the latest Fed minutes amid further signs of reopening and stimulus in China. Contracts on the S&P 500 and the Nasdaq 100 were both up 0.2% as of 7:15 a.m. ET following a positive session in Asia, driven by a rally in Chinese mainland and Hong Kong equity gauges on news the border with China will gradually reopen. Cautious Fed minutes on Wednesday evening failed to stem optimism, while investors await a private US jobs report later today. Europe's Stoxx Index was also positive, erasing earlier losses, with retailers leading gains after Next Plc raised its profit forecast. Oil snapped a two-day drop, while the dollar was flat and 10Y TSY yields erased earlier gains. In premarket trading, Amazon rose after the company announced it is laying off a record 18,000 employees, its biggest corporate workforce reduction ever. Exxon also rose after posting modest gains and analysts noted a positive outlook for its refining business, even as the oil giant forecast that lower oil and natural gas prices will hurt fourth-quarter earnings. Here are some other notable premarket movers: US Foods rises 2.7% as Barclays raises the food service group to overweight, noting compelling valuations and signs it had overcome last year’s troubles. Western Digital climbs 6% after Bloomberg reported that the data storage maker had restarted merger talks with Japan’s Kioxia. Geron drops 11% after announcing an offering of $175m shares. Stock closed 33% higher on Wednesday’s regular trading session after a late-stage trial met its primary and key secondary endpoints. US-listed Chinese stocks fall in premarket trading, after the Nasdaq Golden Dragon China Index scored its best start to a year on record. Alibaba shares decline 1.4% after a 13% surge on Wednesday; Baidu drops 1.1%, JD.com -2.8% Gap falls as much as 4.8% and Victoria’s Secret drops 3.5% after UBS downgrades both retailers to sell, analyst says that the market “underestimates the pressure on industry sales from an expected recession and overestimates the margin benefit from supply chain costs easing.” Comcast shares rise as much as 1.4% after Truist upgrades the cable company to buy from hold. Charter Communications also gains 1.4% after being upgraded to buy, with the broker saying that 2022’s “mad rush” to exit the stocks has resulted in oversold conditions. Geron shares drop as much as 14% after announcing an offering of $175m shares via Goldman Sachs, Stifel, Wedbush, Baird, B. Riley, Needham. Shares closed 33% higher in Wednesday’s regular trading session after a late-stage trial met its main goals. Shares in US Foods rise 2.7% as Barclays raises the food service group to overweight, noting compelling valuations and signs it had overcome last year’s troubles. Silvergate Capital sinks much as 35% after the crypto bank announced it is reducing headcount by approximately 200 employees, or 40%, and estimates the costs associated will be about $8 million. Vyant Bio soars 170% after the company said it had engaged LifeSci Capital as its financial adviser to help in exploring strategic options. Western Digital climbs as much as 7.4% after Bloomberg reported that the data storage maker had restarted merger talks with Japan’s Kioxia. Analysts said any deal between the two would create a company with notable scale in the NAND flash memory market. Yesterday the S&P 500 closed firmly in positive territory, despite minutes from the December FOMC meeting showing officials committed to bring down inflation, while cautioning against an “unwarranted” loosening of financial conditions that would hurt their efforts to achieve price stability, and vowing there would be no rate cuts in 2023.Meanwhile, as Bloomberg notes, mega caps continue to drag US stocks, with just a few stocks responsible for most of the underperformance of the S&P 500 over the past six months. An equally-weighted S&P 500 has outperformed the market-cap weighted index by 5% percentage points since the end of September. “The underlying bullish sentiment is seen as still alive and as long as the momentum remains, a rebound over the new short-term floors established this week will stay as the most likely scenario,” said Pierre Veyret, technical analyst at ActivTrades. “However, market operators are also likely to become increasingly cautious for the end of the week, waiting for today’s major data.” Investors are looking to today's ADP Private Payrolls report and nonfarm payrolls on Friday for clues on the labor market and its implications for monetary policy, after Fed minutes showed officials cautioned against underestimating their will to keep interest rates high for some time. While US stocks pared gains after the minutes, traders are still pricing in rate cuts by end-2023. “Pricing in the market still shows that investors continue to bet that the Fed will start cutting rates before the end of this year,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “Yes, there are some data pointing at slowing economic activity in the US, but the jobs market – which is closely watched by the Fed - remains surprisingly tight.” In Europe, the Stoxx 600 erased earlier losses, spurred by retail, mining and travel shares. The benchmark has risen 3.6% this week in local currency, outperforming the S&P 500’s 0.3% gain. Here are the biggest equity movers: Next shares jump as much as 9.3% after the fashion retailer’s profit guidance beat expectations. Analysts note the company’s strong trading during the Christmas period. Next’s positive release also buoys the wider retail sector, making it the best- performing subgroup on Europe’s Stoxx 600 Ryanair rises as much as 5.3% in Dublin, after the airline operator boosted its full- year profit forecast following stronger-than-expected demand during the Christmas travel period Sonova shares climb as much as 1.7% after launching a new earbud product for patients with slight hearing loss, that Vontobel says will help broaden the company’s portfolio Electrolux gains as much as 5% after Bank of America upgrades the stock to buy from underperform, noting that margin pressure is likely to come to an end in 2023 B&M shares rise as much as 2.7% after reporting third-quarter sales. Analysts said the like-for-like sales during the period were strong, but highlighted the lowered Ebitda guidance Pearson falls as much as 5%, the most since December 1, after Bank of America downgraded the firm to underperform in a note on the European media and internet sector Outokumpu fall as much as 9.3% after Danske Bank cut its recommendation for the Finnish steelmaker to sell from hold, also trimming its target price to EU4 from EU4.70 Modern Times Group shares fall as much as 10%, the most since July, after Citi opened a negative catalyst watch on the media group ahead of its FY results Societe Generale falls as much as 2.1% after KBW cut its recommendation to market perform from outperform in a note on the European investment banking sector Close Brothers Group fell as much as 2.3% after Investec cut the British bank to sell from hold, citing slowing loan growth and “pretty ordinary” returns Earlier in the session, Asian stocks were on track for a fifth-straight daily gain, as investors continued to buy shares in China and Hong Kong on positive policy momentum and after news the border with China will gradually reopen. The MSCI Asia Pacific Index gained as much as 1.1%, before paring much of that advance. Internet giants Alibaba and Meituan were among the biggest boosts to the index, helped by China’s moves to ease its tech crackdown as well as support property firms and smooth geopolitical relations. “Approval for Ant Group to expand its consumer finance business marked another positive step in easing regulatory risks,” Jun Rong Yeap, market strategist at IG wrote in a note. Benchmarks in Singapore, Taiwan and Malaysia also climbed, as investors look beyond the cautious stance of Federal Reserve officials in the minutes of their December meeting. Indonesia’s benchmark fell the most since May 12 as investors look to increase allocations to cheaper northern markets. Better prospects for China’s reopening and economic growth have boosted Asian stocks in recent sessions, driving the MSCI regional gauge up 18% from an October low. The measure lost more than 19% last year amid worries about a slowdown in the West and China’s bumpy path to reopening Japanese stocks edged higher after US stocks advanced following signs of a slowing American economy and mixed Federal Reserve commentary from its latest meeting. The Topix closed less than a point higher at 1,868.90, while the Nikkei advanced 0.4% to 25,820.80. Out of 2,162 stocks in the Topix, 731 rose and 1,336 fell, while 95 were unchanged. The rose slightly after weakening 1.2% against the dollar on Wednesday. In minutes from the latest Fed meeting, many officials highlighted the need to curb inflation without slowing the economy too much. Meanwhile, US data released Wednesday showed manufacturing activity contracted for a second month in December. US Manufacturing Contracts for a Second Month, Prices Ease “Japanese stocks rose as the FOMC announcements passed without incident, with US stocks bought back,” said Takeru Ogihara, chief strategist at Asset Management One. He also noted that the yen’s strengthening had eased a bit. Key stocks gauges in India bucked the generally bullish trend and fell for a second straight session as selloff in banks and financial companies extended amid emerging worries over loan growth. The S&P BSE Sensex fell 0.5% to 60,353.27 in Mumbai, while the NSE Nifty 50 Index declined 0.3%, sending the measures to their lowest close in two weeks. The gauges are now more than 4% down from their record highs seen on December 1. Fourteen of BSE Ltd.’s 20 sector indexes advanced, led by oil and gas companies, which rallied after India announced $2.4 billion of federal aid to expand hydrogen production. Financial companies were the worst performers on the index, with top shadow lender Bajaj Finance plunging 7.2% — its biggest single-day drop since April — after its quarterly loan and asset size growth failed to impress analysts. “Investors are steadily booking profit to trim their positions due to the challenging and uncertain global environment,” according to Kotak Securities analyst Shrikant Chouhan. “Investors are guarded in their equity exposure, as rising interest-rate regime and geo-political tensions are key hurdles that could trigger a major sell-off.”              In rates, treasuries were slightly cheaper vs Wednesday’s close with losses led by front end of the curve, continuing to pressure 2s10s spread lower. The 10-year TSY yield are higher on the day by less than 1bp at 3.69%, flattening 2s10s by 2.4bp; across long end, 20-year sector continues to outperform, tightening 10s20s30s fly by 1bp. A wider flattening move was seen in German yields where 2-year notes are cheaper by 4bp on the day while long-end trades richer. Flattening move across core rates continues in aftermath of Wednesday’s FOMC minutes, which pushed back against potential for rate cuts soon. Despite the hawkish tone of Fed minutes, hedge funds have recently flipped to a record net long SOFR futures position in a sharp u-turn from elevated net short in September. In FX, the Bloomberg Dollar Spot Index was little changed as the greenback traded mixed versus its Group-of-10 peers, though moves were confined to narrow ranges. Treasuries inched lower. The euro rose to a day high of 1.0631, before paring. Bunds and Italian bonds fell, underperforming Treasuries and snapping three-day gains. Money markets added to ECB tightening wagers after the Fed pushed back against easing bets in its December minutes The pound slipped and gilts inched lower. The Bank of England said business leaders see inflation accelerating in the years ahead and wage growth strengthening, adding to concerns about upward pressures on prices The Australian dollar fell while bonds gained as data showed China’s services activity contracted in December amid surging Covid infections The Egyptian pound extended its decline, adding to a 6.2% drop from Wednesday, as the north African nation grapples with its worst foreign- exchange crunch in half a decade In commodities, WTI trades within Wednesday’s range, adding 2.6% to near $74.71. Most base metals trade in the green. Spot gold falls roughly $5 to trade near $1,849/oz. Bitcoin is essentially unchanged on the session, in-fitting with the USD and US equity performance ahead of data/Fed speak. Looking to the day ahead, data releases include Italian CPI for December and Euro Area PPI for November, whilst in the US there’s the ADP’s report of private payrolls for December, the weekly initial jobless claims, the November trade balance, and the final services and composite PMIs for December from both the US and the UK. Otherwise, central bank speakers include the Fed’s Harker, Bostic and Bullard. Market Snapshot S&P 500 futures down 0.2% to 3,866.25 MXAP up 0.4% to 158.25 MXAPJ up 0.7% to 521.05 Nikkei up 0.4% to 25,820.80 Topix little changed at 1,868.90 Hang Seng Index up 1.2% to 21,052.17 Shanghai Composite up 1.0% to 3,155.22 Sensex down 0.5% to 60,346.44 Australia S&P/ASX 200 little changed at 7,063.63 Kospi up 0.4% to 2,264.65 STOXX Europe 600 down 0.2% to 439.31 German 10Y yield little changed at 2.31% Euro up 0.2% to $1.0625 Brent Futures up 2.4% to $79.68/bbl Gold spot down 0.3% to $1,849.12 U.S. Dollar Index little changed at 104.18 Top Overnight News from Bloomberg European bond traders face greater volatility in early 2023 as governments look set to sell record volumes of debt to a market no longer propped up by central bank purchases Inflation numbers are the most important data drivers lately, yet Friday’s US nonfarm payrolls data could be the catalyst for a new round of volatility in the market following the minutes of the Fed’s December meeting German Chancellor Olaf Scholz is coming under renewed pressure from political allies and opponents in Germany to supply additional heavy weapons to help Ukraine fight off Russia’s military invasion The world’s pile of negative-yielding debt has vanished, as Japanese bonds finally joined global peers in offering zero or positive income Southeast Asian yield curves flattened last year as central banks rushed to hike interest rates. In 2023, things are likely to go the other way Europe is set for the warmest January in years, easing an energy crunch that has hammered the region for months. Mild conditions are likely to persist across the region until the end of the month, with a strong weather front blocking out cold polar air, according to forecaster Maxar Technologies Inc Chinese officials this week extended trading hours for the onshore yuan as part of its attempt to increase international use of the currency. Admittedly, it’s a small step, but it follows a push to boost its use in transactions with major energy and commodity exporters and data showing rapid growth in yuan trading activity The border between mainland China and Hong Kong will gradually reopen from Sunday, paving the way for a restoration of economic and social ties that have been disrupted for three years A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded positively throughout most of the session but bourses later drifted off best levels. ASX 200 was initially buoyed by gold miners, but the index briefly dipped into the red as the yellow metal waned. Nikkei 225 faded the bulk of its gains after approaching levels close to 26,000, whilst most of the support emanated from its Banking sector. Hang Seng and Shanghai Comp were firmer from the open and Hong Kong initially outperformed with Tech leading the gains, whilst China said it will gradually reopen the border between Hong Kong and the Mainland on January 8th and will increase flights between the Mainland, Hong Kong, and Macau. PBoC loosens mortgage rates for cities with home price declines, according to local reports. Top Asian News China Weighs Cap on Property Agent Commissions to Bolster Sales Xi and Marcos Agree to Resume Oil and Gas Talks, Expand Ties Hong Kong Reopening With China Comes With 60,000-Person Cap Ambani Focuses on $75 Billion Green Bet as Scions Step Up Jokowi’s Revised Job Creation Law Challenged as Unconstitutional European bourses are mixed but with a slight negative bias, Euro Stoxx 50 -0.2%, following a similar APAC handover ahead of US data. Sectors are mostly in the red, but with Retail outperforming after updates from the likes of Next while Travel & Leisure names are similarly lifted by Ryanair's upside. Stateside, futures are close to the unchanged mark and are yet to convincingly break from the morning's initial ranges ahead of data and Fed speak. Foxconn (2317 TT) December Sales TWD 629bln, -12.3% YY. FY22 sales +10.5% YY; Q1 is expected to be roughly in line with market consensus. UK CMA reportedly will not publish its final report on the Activision Blizzard (ATVI)-Microsoft (MSFT) acquisition until April 26th (at the latest), a delay from the previously planned March 1st. Top European News Next Raises Forecast as Christmas Sales Defy Retail Gloom BMW Takes Cues From Apple With Radical Interior Overhaul Scholz Faces Renewed Heat in Germany to Supply Tanks to Ukraine EU Urges Covid Travel Screening for Passengers From China Worst Day of Train Strikes Threatens to Bring UK to a Halt FX Dollar mixed awaiting busy pm agenda on the eve of NFP and after choppy moves post-FOMC minutes, DXY in tighter 104.420-103.980 band vs 104.730-103.800 yesterday. Euro still keeping close tabs on 1.0600 vs Greenback and adjacent to 10 and 21 DMAs. Aussie unwinding some underperformance against Buck in consolidative price action between 0.6845-00. PBoC set USD/CNY mid-point at 6.8926 vs exp. 6.8955 (prev. 6.9131); strongest since September 2nd 2022. Fixed Income Core benchmarks have managed to lift from initial lows, with the initial move lower seemingly occurring without driver at the time, though in the wake of FOMC minutes, and the move perhaps just being the benchmarks running out of steam from recent action. Currently, Bund, USTs and Gilts are within touching distance of the unchanged mark, with yields diverging slightly between EGBs and USTs. On the supply front, French issuance passed without marked move while Gilts await a 2027 sale shortly. Commodities WTI and Brent are firmer on the session, though the upside stalled on approach to the USD 75/bbl and USD 80/bbl handles respectively with the benchmarks still lower by over USD 5/bbl WTD. Colonial Pipeline said Line 3 is currently down for unscheduled maintenance, and downstream schedules will be impacted by the downtime, Line 3 is expected to restart on January 7th; the remainder of the system will operate as normal, according to Reuters. US Private Inventory Data (bbls): Crude +3.3mln (exp. +1.2mln), Cushing +0.7mln, Gasoline +1.2mln (exp. -0.5mln), Distillates -2.4mln (exp. -0.4mln) Occidental (OXY) said Q4 output was impacted by a combined 10mln BOEPD by North American winter storm Elliott, according to Reuters. Marathon (MPC) reports an unplanned flaring event at its Carson, LA refinery (363k BPD) German Miro Refinery says it has taken one of its three crude oil distillation facilities out of service on December 25th due to a technical defect; expects the facility to be down for around four weeks. Spot gold is little changed and remains in close proximity to the USD 1850/oz mark, having pulled back slightly from Wednesday’s USUD 1864/oz peak, which was the highest price point since June 13th at USD 1877/oz. Base metals are bid having recovered from APAC pressure as China’s accelerated reopening is marred by COVID concerns. Geopolitical An oil tanker chartered by Chevron (CVX) was reportedly loading Venezuelan crude oil for delivery to the United States. "This is the first such transfer in four years amid sanctions. It is part of a debt settlement program", according to TankerTrackers. Turkish President Erdogan spoke via the phone with Russian President Putin, discussed energy and grains corridor, via Turkish Presidency. Called on Putin to declare a ceasefire against Ukraine. US Event Calendar 07:30: Dec. Challenger Job Cuts YoY, prior 416.5% 08:15: Dec. ADP Employment Change, est. 150,000, prior 127,000 08:30: Dec. Initial Jobless Claims, est. 225,000, prior 225,000 Continuing Claims, est. 1.73m, prior 1.71m 08:30: Nov. Trade Balance, est. -$63b, prior -$78.2b 09:45: Dec. S&P Global US Services PMI, est. 44.4, prior 44.4 Central Bank speakers 07:30: Fed’s Harker Discusses the Economic Outlook 09:20: Fed’s Bostic Makes Welcoming Remarks at Markets Conference 13:20: Fed’s Bullard Discusses the Economy and Monetary Policy DB's Jim Reid concludes the overnight wrap Staying in advertising mode this is the first January for three years where normal service has resumed in terms of research outlooks around various parts of the world. For those fed up with Zoom, I’ll be joining Mark Wall, Matt Luzzetti and George Saravelos in the Nordic Outlook seminars next week (Weds-Thurs 11/12th Jan). That feels like an Oceans 11 type DB research cast list! I won’t say who I think is Clooney or Pitt. We will be presenting in Helsinki, Stockholm, Copenhagen and Oslo. We have around 600 people already signed up which is great but if you haven’t yet done so please see the link here. For those interested in Euro HY, our European leveraged finance research team will be holding an event at DB in London next Wednesday going through their top trade recommendations and market outlook. You can register via the link here Markets continued their positive start to the year yesterday, with investors latching onto fresh signs of easing inflation that would allow central banks to ease up on their rate hikes. Indeed, yesterday saw an unexpected decline in French inflation, a further round of energy price declines, and the prices paid component of the ISM manufacturing print came in at its lowest level since April 2020. All those factors triggered a sizeable rally for equities and bonds (particularly in Europe), even as other data pointed to a tight US labour market that could force the Fed to hike even further. Indeed the Fed minutes late in the session confirmed that the Fed are concerned about financial conditions loosening too much. In terms of those various drivers, the tone for the day was set from the outset by that French CPI release, which showed that inflation unexpectedly fell in December to +6.7% on the EU-harmonised measure (vs. +7.3% expected). So that’s further good news on the heels of the downside surprises from Spain and Germany, and bodes well for the full Euro Area release tomorrow. In response, investors moved to dial down the amount of rate hikes they expect from the ECB this year, with the rate priced in by the December meeting coming down by nearly 15bps on the day. In speaking to DB’s Mark Wall though he says that for the ECB their hiking profile will be about “peak versus persistence”. While its very welcome that European headline inflation is past the peak, Mark suggests the resilience of core inflation in December is more important than these downside surprises. The immediate European growth outlook is better than feared a few months back which might make the labour market tighter than was expected. See here for the latest on Mark’s 3.25% terminal ECB call from December. For now though these signs of downward pressure on headline inflation were given further momentum by the latest moves in energy prices. In particular, European natural gas futures fell nearly -10% to a one-year low of €65.00 per megawatt-hour, which comes amidst unusually warm weather in Europe for this time of year that’s helping to cut energy demand. Furthermore, oil prices saw substantial declines of their own, with Brent crude down by -5.19% yesterday to $77.84/bbl, whilst WTI fell -5.32% to $72.84/bbl. That’s adding to the good news for central banks and consumers on the inflation side, and also means that the cost of government subsidies could prove to be much less than feared. Amidst these positive signs on the inflation front, sovereign bond yields saw further declines on both sides of the Atlantic. In Europe, yields on 10yr bunds (-11.7bps), OATs (-13.8bps) and BTPs (-22.2bps) all fell for a 3rd consecutive session, which continued their very strong start to the year. Meanwhile in the US, the declines were more muted, but yields on 10yr Treasuries still fell -5.6bps on the day to 3.683%. This morning in Asia, they are back up around +3.2bps as we go to print. The main interruption to the buoyancy in markets yesterday (although not enough to throw it off course) came from the US JOLTS report for November and the FOMC minutes. This former is closely followed by the Fed, and yesterday’s release showed that the labour market remained incredibly tight towards the end of last year, thus pointing to further inflationary pressures ahead. For instance, the number of job openings came in at 10.458m (vs. 10.050m expected), and the previous month’s figure was also revised higher. That means that the number of job openings per unemployed individual ticked up to 1.74 in November, which is still way above its pre-pandemic levels of around 1.2. In addition, the quits rate of those voluntarily leaving their job (which is strongly correlated with wage growth) ticked back up to 2.7% in November. So there’s still plenty of ammunition for the hawks even as inflation looks to have passed its peak now. Speaking of hawkish voices, one person we did hear from yesterday was Minneapolis Fed President Kashkari. He’s a voting member on the FOMC this year, and said that “it will be appropriate to continue to raise rates at least at the next few meetings until we are confident inflation has peaked”. He said he had the Fed pausing at 5.4%, but that “any sign of slow progress that keeps inflation elevated for longer will warrant, in my view, taking the policy rate potentially much higher.” Later in the session, we also got the latest FOMC minutes from the December meeting. Almost exactly a year after the 2021 December Fed meeting minutes that marked the hawkish turn in Fed policy, yesterday saw Fed officials reaffirm their conviction to keeping interest rates restrictive as long as it takes to quell inflation. The committee is clearly concerned with financial conditions easing as a response to the Fed slowing interest rate hikes. Officials cited that “an unwarranted easing in financial conditions, especially if driven by a misperception by the public of the committee’s reaction function, would complicate the committee’s effort to restore price stability.” There was no explicit discussion hinting at a further slowdown of rate hikes to 25bps in February, as “most participants emphasized the need to retain flexibility and optionality when moving policy to a more restrictive stance." However that does not mean that a further slowing is off the table. The market pricing on the February meeting was unchanged with 33bps priced in, and 52bps priced in through the March FOMC meeting. Against this backdrop, equities finished solidly higher after a volatile US afternoon. The S&P 500 was up roughly +1.0% just ahead of the FOMC minutes, before whipsawing about 30pts in both directions before the close. In the last 15 minutes of the US trading session the index rallied +0.67% to finish up +0.75% overall on the day. The gains were led by the more cyclical industries, and the NASDAQ also advanced +0.69%. The best performing industry in the S&P 500 was autos (+4.42%), led by Tesla (+5.12%) but Ford (+2.8%) and GM (+2.6%) also saw solid gains as well. The one industry that dragged and caused the NASDAQ to underperform was Software (-1.03%). The solid gains also came in spite of a further deterioration in the ISM manufacturing print, which fell to 48.4 in December (vs. 48.5 expected). That it’s lowest level since May 2020, although to be fair we did get some more positive news in that the prices paid component fell for a 9th consecutive month to 39.4, which marks its longest run of consecutive declines since 1974-5. Back in Europe, the equity advances were larger yesterday as markets closed before the FOMC minutes, with the STOXX 600 (+1.38%) bringing its YTD gains to +3.60% after just three sessions. Asian equity markets are trading higher this morning following a higher close on Wall Street overnight. Also, risk appetite across the region is seeing a further boost on the China reopening trade as well as the PBOC’s pledges for more targeted economic measures. As I type, Chinese stocks are topping gains with the CSI (+1.71%) and the Shanghai Composite (+0.95%) both trading in positive territory while the Hang Seng (+1.01%) is further extending its previous session gains amid a broad rally in Chinese tech stocks. Elsewhere, the Nikkei (+0.43%) and the KOSPI (+0.34%) are also higher. Outside of Asia, US stock futures are pointing to a slightly negative start with those on the S&P 500 (-0.09%) and the NASDAQ 100 (-0.17%) edging lower. Coming back to China, the Caixin services PMI for December came in at 48.0 (v/s 46.8 expected), rising from a 6-month low of 46.7 in November. Back in the US, there’s no sign of a resolution yet in terms of who’ll be the next Speaker of the House of Representatives. In terms of the latest, House Republican leader Kevin McCarthy failed to win a majority of House members in an additional three ballots yesterday. Republicans hold a very slim majority of seats in the lower chamber and McCarthy can only afford to lose 4 GOP votes, but he has consistently lost around 20 votes on multiple ballots now. While this is not yet a market moving story, it does portend the kind of fight that Congress can see around the upcoming debt ceiling negotiations. When it comes to yesterday’s other data, UK mortgage approvals fell by more than expected to 46.1k in November (vs. 53.0k expected), which is their lowest level in over a decade if you exclude the pandemic months of April-June 2020. Separately, the final Euro Area composite PMI for December was revised up half a point from the flash reading to 49.3 (vs. flash 48.8). To the day ahead now, and data releases include Italian CPI for December and Euro Area PPI for November, whilst in the US there’s the ADP’s report of private payrolls for December, the weekly initial jobless claims, the November trade balance, and the final services and composite PMIs for December from both the US and the UK. Otherwise, central bank speakers include the Fed’s Harker, Bostic and Bullard. Tyler Durden Thu, 01/05/2023 - 08:09.....»»

Category: blogSource: zerohedgeJan 5th, 2023

What China"s Accelerated Reopening Means For The Economy And Markets

What China's Accelerated Reopening Means For The Economy And Markets On the evening of 26 December, China released new guidelines to significantly relax its Covid control policy for domestic infections and inbound travelers, effective 8 January 2023. As reported previously, key measures include i) removing quarantine requirements for Covid cases, ii) abandoning the risk district classification system, and iii) shifting to a de facto “0+0” regime for inbound travelers. In a note from Goldman's China strategy chief, Hui Shan, he writes that while the new guidelines as a major step towards the full reopening, he cautions on the increased challenges to China’s medical system in the near term. He adds that the frontloaded China reopening timetable adds conviction to the bank's below-consensus forecast for Q4 GDP growth (+1.7% yoy) and above-consensus 2023 GDP forecast (+5.2% yoy) 1. Key takeaways from the new guidelines On the evening of 26 December, China’s National Health Commission (NHC) released new guidelines to significantly relax its Covid control policy for domestic infections and inbound travelers (Exhibit 1). The new guidelines are as follows: On the management of Covid: China will immediately rename the term “Novel Coronavirus Pneumonia” (新冠肺炎) to “Novel Coronavirus Infection” (新型冠状 病毒感染). It will downgrade the management of the disease from the current top-level Category A to less strict Category B, effective 8 January 2023, after which China will no longer impose quarantine measures for Covid cases, will no longer trace their close contacts, and will no longer identify high/low-risk districts of Covid. On policies for inbound travelers: China will abandon the requirements of frequent testing and centralized quarantine for inbound travelers (although a negative 48hr PCR test result before departure to China is still required). Inbound travelers will be allowed to enter the community immediately upon health declaration, and various restrictions on the international routes of airlines will be removed. China also pledged to make it easier for foreigners to obtain inbound travel visas, and gradually normalize domestic residents’ outbound travel. On medical preparations: China pledged to further strengthen its medical preparations to cope with the reopening, including pushing up the vaccination rate for the elderly population, improving the supply of Covid-related medicines and test kits, expanding intensive care units (ICUs), and enhancing the supply of medical resources in the rural areas. 2. Another significant step towards full reopening China has rapidly relaxed its Covid policies since November, featured by the Covid “20 measures” on 11 November, “10 measures” on 7 December, and the new guidelines on 26 December. China’s new guidelines, which will de facto reopen borders and abandon quarantines, are a significant step towards the full reopening (or, the “living with Covid” mode). According to Goldman, the most important change in the guidelines lies with cross-border policies, which implies a de facto “0+0” regime for eligible inbound travelers starting from 8 January 2023 (vs. the current “5+3”). That said, on the domestic front, the downgrade of Covid management and removal of quarantine requirements appear to be an “after the fact” adjustment, as in practice many people who have tested positive have been allowed to go to work and enter public places in recent weeks. However, amid the rapid reopening, the challenge to China’s medical system may have been significantly escalated, especially for less developed inland and rural areas amid the upcoming Lunar New Year holiday. This highlights the urgency of more and faster policy efforts to boost elderly vaccination and other medical resource supply (e.g., ICU beds, oral pills, and medical staff). 3. Implications for growth and markets High-frequency mobility data (Exhibit 2) and December Emerging Industries PMI (EPMI) pointed to weaker growth momentum during the frontloaded "exit wave", on the back of surging infections, a temporary labor shortage and increased supply chain disruptions. Although the NHC stopped the release of Covid case data, experience from Hong Kong and Taiwan suggests daily new cases may peak in late December or January in mainland China (Exhibit 3). According to Goldman, this adds conviction to the bank's below-consensus forecast for Q4 GDP growth (+1.7% yoy) countered by above-consensus 2023 GDP forecast (+5.2% yoy). Furthermore, Goldman also maintain the view that China reopening is positive for CNY, and that improved growth expectations in 2023 might outweigh unfavorable factors such as deterioration in goods and services trade balances. On FX, the bank expects small appreciation of the USDCNY over the 12-month horizon to 6.90. On the spillover effects of China reopening, Hong Kong and Thailand may benefit the most from the international tourism channel if China removes visa restrictions and outbound travel gradually normalizes. More in a full note from Goldman available to professional subs. Tyler Durden Tue, 12/27/2022 - 23:00.....»»

Category: worldSource: nytDec 28th, 2022