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Category: blogSource: theflyonthewallJan 3rd, 2019

Abcam Plc Results for the 12- and 18-month periods ended 31 December 2021

Growing demand for Abcam's portfolio of in-house products drives calendar 2021 revenues up by 22% at constant exchange rates Acquisition of BioVision completed 26 October 2021 CAMBRIDGE, United Kingdom, March 14, 2022 (GLOBE NEWSWIRE) -- Abcam plc (NASDAQ:ABCM, AIM: ABC)) (‘Abcam', the ‘Group' or the ‘Company'), a global leader in the supply of life science research tools, today announces its final results for the 18-month period ended 31 December 2021 (the ‘period'). The Group's accounting reference date changed from 30 June to 31 December during the year1, therefore these financial statements report on both a 12- and 18-month period. SUMMARY PERFORMANCE £m, unless stated otherwise   12 months ended 31 Dec 2021 (unaudited)(‘CY2021') 12 months ended 31 Dec 2020 (unaudited)(‘CY2020')   18 months ended 31 Dec 2021 (audited) Revenue   315.4 269.3   462.9 Adjusted gross profit margin*, %   72.2% 70.0%   71.8% Reported operating profit   7.1 1.0   24.4 Adjusted operating profit**   60.4 50.6   95.5 Adjusted operating margin, %   19.2% 18.8%   20.6% Share-based payments related to pre-CY2021 schemes   (12.9) (13.3)   (22.0) Like-for-like adjusted operating profit (post share-based payments related to pre-CY2021 schemes)***   47.5 37.3   73.5 Like-for-like adjusted operating margin***, %   15.1% 13.9%   15.9% Net (Debt) / Cash****   (24.1) 211.9   (24.1) * Excludes the amortisation of the fair value of assets relating to the inventory acquired in connection with the acquisition of BioVision. ** Adjusted figures exclude impairment of intangible assets, systems and process improvement costs, acquisition costs, amortisation of fair value adjustments, integration and reorganisation costs, amortisation of acquisition intangibles, share-based payments and employer tax contributions thereon, the tax effect of adjusting items and credits from patent box claims. Such excluded items are described as ‘adjusting items'. Further information on these items is shown in note 4 to the consolidated financial statements. *** In previous reporting periods, share-based payments have not been included within adjusting items. With the approval of the Profitable Growth Incentive Plan (‘PGIP') during CY2021, management considers it to be more appropriate and more consistent with its closest comparable companies to include all share-based payments in adjusting items. To aid comparison with our previous presentation of results, we have included the adjusted operating margin in the table above on a like-for-like basis, excluding this change (‘Like-for-like'). **** Net Cash comprises cash and cash equivalents less borrowings. CY2021 FINANCIAL HIGHLIGHTS1,2 Revenue growth of +22% (+17% reported) at constant exchange rates, compared to CY2020, including a 1%pt contribution from the acquisition of BioVision +38% total in-house CER revenue growth (including Custom Products & Licensing3 and   £2.6m of incremental revenue from BioVision) (+32% reported) Revenue from in-house products and services contributed 61% of total revenue (including Custom Products & Licensing3 and £2.6m of incremental revenue from BioVision) Adjusted2 gross margin increased by over 200 basis points to 72.2% (CY2020: 70.0%), benefiting from the contribution of higher margin in-house products and volume leverage resulting from the increase in revenue Adjusted2 operating profit of £60.4m (excluding share-based payments), equating to an adjusted operating margin of 19.2% (CY2020: 18.8%) Adjusted2 operating margin on a like-for-like4 basis improved over 300 basis points to 16.5% in H2 '21 (Jul-Dec), from 13.3% in H1 '21 (Jan-Jun) Statutory reported operating profit increased to £7.1m from £1.0m in CY2020 Net cash inflow from operating activities increased to £62.9m (CY2020: £58.9m) BUSINESS HIGHLIGHTS Focus on serving customers' needs globally as research activity levels continued to normalise and demand for Abcam products increased Positive customer transactional Net Promotor Score ('tNPS') of +56 (CY2021) and product satisfaction rates at all-time highs Completed the acquisition of BioVision, Inc (‘BioVision'), a leading innovator of biochemical and cell-based assays, in October 2021, for cash consideration of $340m (on a cash free, debt free basis) High employee engagement, with the business ranked in the Top 5 in the Glassdoor UK Employees' Choice Awards in January 2022, for the second year running Strengthened and expanded leadership in commercial and operational teams with senior hires in Commercial, Brand, China, and Supply Chain Expanded the Group's global presence, with the opening of new and enlarged sites in China, the US (Massachusetts, California, Oregon), Singapore, and Australia Upgraded supply chain systems at three locations, implemented new data architecture, and began transition to a new e-commerce platform, with completion of the digital transformation due in 2022 Completed the secondary US listing on Nasdaq's Global Market in October 2020 (supplementing existing listing on AIM on the London Stock Exchange) Expanded Asia, digital, and life science industry experience on the Board of Directors, with the appointments of Bessie Lee, Mark Capone and Sally Crawford, as Non-Executive Directors SHARE TRADING, LIQUIDITY AND LISTING Following our listing on Nasdaq in October 2020, the number of Abcam shares traded as ADSs on Nasdaq has doubled. While only 10% of our shares trade in the US market, it represents 25% of liquidity The Board continues to review options to increase share liquidity and intends to consult with shareholders on these options in due course CY2022 GUIDANCE Global lab activity continues to recover, though some uncertainty remains CY2022 trading performance YTD is in line with our expectations Expect total CER5 revenue growth of c.20% (including BioVision) with mid-teens organic CER revenue growth Expect continued adjusted gross margin improvement from the contribution of higher margin in-house products and full year impact of the BioVision acquisition Expect total adjusted operating cost growth (including depreciation and amortisation) at mid-teens percentage, as we slow rate of investment and leverage recent investments LONG TERM GOALS TO CY2024 CY2024 revenue goal target range increased by £25m to £450m-£525m, adjusted to incorporate BioVision6 and current operating performance Adjusted operating margin and ROCE targets remain unchanged Commenting on today's results, Alan Hirzel, Abcam's Chief Executive Officer, said: "I am grateful to everyone at Abcam for their dedicated effort through this most challenging time and thank our customers and partners for their ongoing trust and support. We have had another successful year operationally and financially despite the ongoing challenges. As we look ahead to 2022, we expect to create more innovation and success out of the past two years of investment as we installed elements of Abcam's long term growth strategy. The scientific community remains our guide and with their support we are becoming a more influential and trusted brand globally." Analyst and investor meeting and webcast: Abcam will host a conference call and webcast for analysts and investors today at 13:00 GMT/ 09:00 EDT. For details, and to register, please visit A recording of the webcast will be made available on Abcam's website, Notes: On 2 June 2021, Abcam announced that it had changed its accounting reference date from 30 June to 31 December. Following this extension, these financial statements are for the 18-month period ended 31 December 2021. To assist understanding of the company's underlying performance, like-for-like financial information for the 12-month periods ended 31 December 2021 (‘CY2021') and 31 December 2020 (‘CY2020') have also been provided. These results include discussion of alternative performance measures which include revenues calculated at Constant Exchange Rates (CER) and adjusted financial measures. CER results are calculated by applying prior period's actual exchange rates to this period's results. Adjusted financial measures are explained in note 2 and reconciled to the most directly comparable measure prepared in accordance with IFRS in note 4 to the interim financial statements. Custom Products & Licensing (CP&L) revenue comprises custom service revenue, revenue from the supply of IVD products and royalty and licence income. In previous reporting periods, share-based payments have not been included within adjusting items. With the approval of the Profitable Growth Incentive Plan (‘PGIP') during CY2021, management considers it to be more appropriate and more consistent with its closest comparable companies to include all share-based payments in adjusting items. To aid comparison with our previous presentation of results, we also calculate adjusted operating margin on a like-for-like basis, excluding this change (‘Like-for-like'). Average CY2021 exchange rates to GBP as follows: USD: 1.378; EUR: 1.159, RMB: 8.891, JPY: 150.7 Last 12-month BioVision recurring revenues of £17.8m at point of acquisition, adjusted for non-recurring COVID-19 related revenues, and sales to Abcam during that period. The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014. For further information please contact: Abcam + 44 (0) 1223 696 000 Alan Hirzel, Chief Executive OfficerMichael Baldock, Chief Financial OfficerJames Staveley, Vice President, Investor Relations       Numis – Nominated Advisor & Joint Corporate Broker + 44 (0) 20 7260 1000 Garry Levin / Freddie Barnfield / Duncan Monteith       Morgan Stanley – Joint Corporate Broker + 44 (0) 207 425 8000 Tom Perry / Luka Kezic       FTI Consulting + 44 (0) 20 3727 1000 Ben Atwell / Julia Bradshaw   This announcement shall not constitute an offer to sell or solicitation of an offer to buy any securities. This announcement is not an offer of securities for sale in the United States, and the securities referred to herein may not be offered or sold in the United States absent registration except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1933, as amended. Any public offering of such securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer, which would contain detailed information about the company and management, as well as financial statements. Forward Looking StatementsThis announcement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any express or implied statements contained in this announcement that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation statements of targets, plans, objectives or goals for future operations, including those related to Abcam's products, product research, product development, product introductions and sales forecasts; statements containing projections of or targets for revenues, costs, income (or loss), earnings per share, capital expenditures, dividends, capital structure, net financials and other financial measures; statements regarding future economic and financial performance; statements regarding the scheduling and holding of general meetings and AGMs; statements regarding the assumptions underlying or relating to such statements; statements about Abcam's portfolio and ambitions, as well as statements that include the words "expect," "intend," "plan," "believe," "project," "forecast," "estimate," "may," "should," "anticipate" and similar statements of a future or forward-looking nature. Forward-looking statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected, including, without limitation: a regional or global health pandemic, including the novel coronavirus ("COVID-19"), which has adversely affected elements of our business, could severely affect our business, including due to impacts on our operations and supply chains; challenges in implementing our strategies for revenue growth in light of competitive challenges; developing new products and enhancing existing products, adapting to significant technological change and responding to the introduction of new products by competitors to remain competitive; failing to successfully identify or integrate acquired businesses or assets into our operations or fully recognize the anticipated benefits of businesses or assets that we acquire; if our customers discontinue or spend less on research, development, production or other scientific endeavours; failing to successfully use, access and maintain information systems and implement new systems to handle our changing needs; cyber security risks and any failure to maintain the confidentiality, integrity and availability of our computer hardware, software and internet applications and related tools and functions; we have identified material weaknesses in our internal control over financial reporting and failure to comply with requirements to design, implement and maintain effective internal control over financial reporting could have a material adverse effect on our business; failing to successfully manage our current and potential future growth; any significant interruptions in our operations; if our products fail to satisfy applicable quality criteria, specifications and performance standards; failing to maintain our brand and reputation; our dependence upon management and highly skilled employees and our ability to attract and retain these highly skilled employees; and the important factors discussed under the caption "Risk Factors" in Abcam's prospectus pursuant to Rule 424(b) filed with the U.S. Securities and Exchange Commission ("SEC") on 22 October 2020, which is on file with the SEC and is available on the SEC website at, as such factors may be updated from time to time in Abcam's other filings with the SEC. Any forward-looking statements contained in this announcement speak only as of the date hereof and accordingly undue reliance should not be placed on such statements. Abcam disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise, other than to the extent required by applicable law.The Group has changed its year end to December 31 and, as a result, this year's results present an 18-month accounting period, which ended on 31 December 2021. The comparison to the previously reported 12 months ended 30 June 2020 presents substantial period-on-period increases due to the longer period of account in the current reporting period and provides little helpful insight into the underlying performance of the business. To provide more useful commentary, both the CEO and CFO reviews largely focus on the financial and operating performance of the business in the 12 months ended 31 December 2021 (‘CY2021') compared to the 12 months ended 31 December 2020 (‘CY2020'). The audited financial statements in the back of this report contain statutory results for the 18 months ended 31 December 2021 and a comparison to the year ended 30 June 2020. CEO Report Moving forward with courage and hope As we continue to grapple with the challenges of our times, I am convinced that for all of us in the science community, the only way to move forward is with courage and hope. Over the last several decades, the positive impact of life science on the human condition has been profound. For example, across every income level and every country where there has not been a catastrophe, life expectancy has increased by nearly 20 years since the 1960s. Life science, medical discovery and innovation have been central to this health and social progress. In the last two decades, since the sequencing of the human genome, research in life sciences has more than doubled, and with it the potential to make even more progress. New discoveries can take 10 years or more to make a tangible difference and I am hopeful that our children will reap greater benefits in health and lifespan in the years to come. As I think about these inspiring achievements, alongside the development of our own business, I am determined to ensure Abcam continues to innovate and play a key role in helping our customers reach their scientific and career goals. We remain resolutely focused on enabling scientists to make breakthroughs faster, with better quality research tools and a passion for collaboration. It won't stop there either. We see a greater role for Abcam to accelerate the transition of discovery to clinical and social impact. I have always believed in the power of collaboration and the global response to the pandemic has shown the benefits of such collaboration. With the challenges ahead we will find ways for researchers, funders, publishers, tools companies, translational researchers, clinicians, diagnostics companies, pharmaceutical companies, and regulators to work together in common purpose as one. Improvements our business has made in product performance and consistency and our expanding network of commercial relationships are significantly reducing the time from first discovery to a better patient outcome. We look to put more effort toward this collaborative approach as we build our business. This collaborative spirit is also championed within our teams. Efforts we have been making to improve inclusion and diversity have amplified more voices through groups led by our people and outreach activities in our communities. Despite everything we faced in 2021, and the disturbing geopolitical aggression in Europe at the start of 2022, we see this period as an exciting time for proteomics research. I remain confident that Abcam is well positioned to influence and improve the journeys from discovery to impact, while sustaining value creation for all stakeholders. Our performance We achieved the major strategic, operational and financial goals we set for the business in the period and continued to make significant operational changes and to implement our growth strategy. Feedback from our customers was excellent, with a customer tNPS of +56 (CY2021). Sales of our in-house products grew strongly as we scaled up our capability here. Because these are sold at a higher margin, we started to feel the benefits of increased operational leverage. The business transition to 2024 is nearly complete and we will soon be able to fully reap the benefits of what we have been building over recent years.   Indeed, the biggest contributor to Abcam's growth and value and the main reason why we are winning more market share is the portfolio of proprietary products developed and manufactured at Abcam. This burgeoning in-house library of recombinant antibodies, immunoassays, conjugation products, proteins, and cell lines is offering customers the right products, to the right pathways, with a promise to go the distance from discovery to clinic. Customer demand for this portfolio drove in-house product revenue to £174m in CY2021 (CY2020: £129m), equivalent to 41% annual CER growth (36% excluding BioVision). Our investment of 14% of revenue (own product) back into R&D (including capitalised product development) is helping us sustain the growth and higher customer satisfaction in these areas. The BioVision acquisition in October 2021 added one of our largest suppliers to the in-house portfolio, with strengths in biochemical and cell-based assay kits. Business integration is moving ahead as planned and we expect it to provide further innovation opportunities within this portfolio. Risks around the global pandemic remain – as evidenced by the emergence of the Omicron variant in late 2021 – but data suggests that overall lab activity increased consistently during 2021 in our largest markets. Progress toward our strategic goals We aim to deliver consistent, durable growth and performance in a responsible way. Despite the continued disruption of COVID-19, we have seen sustained progress during the period as we continue to deliver on the growth strategy announced in November 2019. Strategic KPI performance (in-house product revenue growth and customer transactional net promotor score) was positive, feedback on our products has never been stronger, and we continue to make market share gains worldwide. At the same time, we are focused on ensuring the significant investment made in our innovation capabilities, systems and processes, facilities, and people support our long-term growth aspirations. As we seek to further strengthen our position as the partner of choice for our customers and partners, we have made further progress against each of the following strategic goals to drive sustained organic growth set out in 2019: 1. Sustain and extend antibody and digital leadership 2. Drive continued expansion into complementary market adjacencies 3. Build organisational scalability and sustain value creation Innovation and our impact on scientific progress Our product portfolio enables breakthrough proteomics discovery by our customers and partners. They are working to innovate and discover proteomic mechanisms such as the role of signaling and regulatory proteins in biological pathways – ultimately leading to diagnostics and treatments for diseases such as cancer and immune deficiency disorders. Their success depends on rigorous product performance and reliability, and it's these factors that continue to guide our innovation efforts. Since 2019, we have put more resources into innovating faster in antibodies and immunoassays, and we have complemented these areas with new product categories such as conjugation kits, proteins/cytokines, engineered cell lines, and now a range of BioVision cellular and biochemical assays. In total, new products introduced since 2019 represented approximately 7% of 2021 revenue (CY2021) and our own-product revenues (including Custom Products & Licensing) contributed over 60% of total revenue in the last 12 months. We are confident that our customer data insights and our approach to innovation and marketing underly this strong growth driver from internal innovation. In CY2021, our teams developed and launched over 2,500 high-quality antibody products, including recombinant RabMAb antibodies, antibody pairs, SimpleStep ELISA kits and new formulations that enable faster labelling and assay development. These new product introductions combined to meet two objectives for our new product development: fill unmet needs in research and increase product quality. As we have developed our high throughput innovation capability, we have also made bolder moves to delist third party supplied product that doesn't meet our customer quality needs. Together, these actions have substantially improved Abcam's quality and our overall brand preference. According to the most recently available industry data, these innovations and other initiatives have led Abcam to become the most cited antibody company. Abcam products were cited more than 70,000 times in scientific journals in 2020 and the business now has a citation share of over 22%, up approximately two percentage points on the previous year (source: CiteAb, based on over 300,000 recorded citations for 2020 as of February 2022). Most importantly, we have seen a continued strengthening of customer feedback during the period, with product satisfaction rates at all-time highs (rolling 12-month period to 31 December 2021). Extending Abcam's leadership in research antibodies has provided a strong foundation to expand into adjacent product categories used in protein research. We took our first adjacent product category move in 2014 with the introduction of proprietary immunoassays. In total these (non-primary antibody) product categories now contribute over 30% of total revenue. In CY2021, total CER revenue growth from these categories was 32% demonstrating the progress made developing these capabilities and the growing customer interest in these high-quality product portfolios. Other, newer product categories have had less time to develop than either our antibody or immunoassay portfolio, but we are seeing similar growth performance and opportunities here. Extending the impact of our innovation through partnership and collaboration Across the translational research, drug discovery and clinical markets, we are focused on strengthening our position as a leading discovery partner to organisations looking to access high quality antibodies and antibody expertise for commercial use within their products and assays – a philosophy we refer to as ‘Abcam Inside'. The period has seen good progress in this regard, with continued growth in the adoption of our products for use on third party instrumentation platforms, or by partners for their use in the development of clinical products. We established several new platform partnerships during the period while significantly expanding existing co-development programmes with current partners, including recently announced strategic partnerships with Alamar and Nautilus Biotechnology. We also grew our specialty antibody portfolio – signing 85 new outbound commercial agreements in CY2021 with organisations that have the potential to lead to new diagnostic or therapeutic tools in years to come. To date, approximately 1,000 of our antibodies are now validated for commercial use on third party platforms or as diagnostic tools, with over 3,000 more currently undergoing evaluation by our partners. We believe both areas remain significant long-term opportunities for the Group. Building a scalable enterprise Over the last two years our teams have been putting ideas, know-how, and capital to work installing new capabilities as we build scalability into our operational infrastructure, including our manufacturing and logistics footprint and IT backbone and digital capabilities to support our growth. At the same time, global supply chains have faced significant challenges primarily as a result of the COVID-19 pandemic. These additional pressures have been resolved by additional investment in manufacturing equipment and processes, while also introducing additional shift patterns in order to achieve better use of our resources. Further progress is expected as we pursue changes to our processes, including quality control, kit development and logistics as well as benefits expected from our integrated business planning process. We also completed several important global footprint initiatives in the period, with site moves or upgrades completed in Boston, Fremont, and Eugene in the USA; Hangzhou and Shanghai in China; Adelaide in Australia; Amsterdam in the Netherlands as well as relocating our Hong Kong operations to Singapore. These initiatives enable more efficient customer service, manufacturing, supply chain and logistics processes; create additional capacity needed to meet our growth objectives; and reduce risks that were identified in our ongoing risk management process. Across our IT and digital infrastructure, roll-out of the final stages of our ERP renewal programme continued, covering manufacturing and supply chain. Systems have now been successfully deployed across the Group's major manufacturing hubs, with final deployments in other small sites due for completion in 2022. At the same time, development of the next generation of our customer-facing digital platform has continued. The new platform is being designed to enable a step change to the customer experience, supporting dynamic content, a more personalised experience and driving enhanced search and traffic. Beta-testing in select markets was launched during the year and we remain on track to launch the new site in 2022. Sustaining social and financial value creation Our impact flows from our vision and purpose, which ultimately lead to a positive impact on the world: helping the scientific community accelerate breakthroughs in human healthcare. The more successful we can be as a business, therefore, the greater the difference we can make in the world. Our vision to be the most influential life sciences company comes with a commitment to the highest ethical standards, not just in our own conduct, but across our value chain. We have made further progress against each of our four priority areas (those seen as most important to sustaining value creation, namely: Products; People; Partners; and Planet) and were pleased to be ranked first by Sustainalytics, a leading ESG ratings agency, across its universe of more than 1,000 healthcare companies globally. Full details of our commitments, performance and progress will be provided in our 2021 Impact Report to be published in April and made available on our corporate website ( Of course, the ability of Abcam and our industry to continue to thrive will depend on future generations of scientists and so it's exciting to see that more young people than ever are taking STEM subjects. I am proud of Abcam's support in this area through our work with In2Science UK and The Henrietta Lacks Foundation. We have also made significant progress on our diversity and inclusion during the period. A new D&I strategy was launched alongside the establishment of multiple Employee Resource Groups, an enhanced family leave policy, and the introduction of diversity and inclusion targets that are tied to senior management compensation. These and other initiatives ensure that we are building an exceptional workplace for our teams, and it was pleasing to once again be recognised by Glassdoor as one of the top 5 employers in the UK in 2021. Attractive outlook We remain on track to achieve the five-year plan that we set out in 2019. In 2022, we will complete a few large-scale tasks to help us scale the business over the next decade. Once those are complete, the agenda for the year will largely focus on refining what we have installed, learning from the market, and making adjustments to drive double digit revenue growth and improve profit margins. With the addition of BioVision and adjustments for ongoing revenue, plus our confidence in the performance of the business, we have raised our revenue target for 2024 to a range of £450m-£525m, representing growth rates that are two to three times our underlying market and reflect the durable growth of Abcam. None of this attractive outlook could happen without great energy and effort by everyone involved. I thank our colleagues for their unwavering dedication, our customers for the trust they place in us, and our board of directors and our shareholders for their continued support. Alan HirzelCEO CFO Report The Group has changed its year end to 31 December. As a result, this year's results will present an 18-month accounting period, which ended on 31 December 2021. As a result, the comparison to the previously reported 12 months ended 30 June 2020 presents substantial period-on-period increases due to the longer period of account in the current reporting period and provides little helpful insight into the performance of the business during 2021. In order to provide a more useful comparison, this review largely focuses on the comparison of the 12 months ended 31 December 2021 (‘CY2021') to the 12 months ended 31 December 2020 (‘CY2020'). The audited financial statements in the back of this report contains the statutory results for the 18 months ended 31 December 2021 and a comparison to the year ended 30 June 2020. In preparing the CY2020 and CY2021 balances, the Group has applied consistently its accounting policies as disclosed within note 1. Although CY2020 and CY2021 are not audited financial periods within these financial statements, the balances have been extracted from the Group's underlying accounting records and reconciled in line with previously disclosed statements. For further information on the composition of CY2020 and CY2021, refer to the ‘Basis of preparation' section in the back of this report. The CFO's Report and Financial Review includes discussion of alternative performance measures which are defined further in the Notes to the Preliminary Financial Information. These measures include adjusted financial measures, which are explained in note 1b and reconciled to the most directly comparable measure prepared in accordance with IFRS in note 4. Further detail on the Group's financial performance is set out in the Preliminary Financial Information and notes thereto. Constant exchange rates ("CER") growth is calculated by applying the applicable prior period average exchange rate to the Group's actual performance in the respective period. Continued strong performance The Group reported revenue for CY2021 of £315.4m (CY2020: £269.3m), a CER growth rate of 22%. This figure includes a contribution of approximately one percentage point, or £2.6m, from BioVision following the acquisition's completion on 27 October 2021. Growth in revenue from our own, in-house (catalogue) products was 41% (CER) for CY2021, including a four-percentage point contribution from BioVision. While laboratories continued to relax COVID-19 related restrictions during the period, and data indicates overall lab activity levels increased through 2021, activity had not fully returned to pre-COVID levels by the end of the period due to the emergence of the Omicron variant in late 2021. Adjusted operating profit (before all share-based payment costs) for CY2021 was up 19%, to £60.4m (CY2020: £50.6m). This equates to an adjusted operating profit margin (excluding share-based payments) of 19.2% (CY2020: 18.8%). After share-based payment charges related to share incentive schemes in force prior to the start of the year, of £12.9m, like-for-like adjusted operating profit was £47.5m, equivalent to an adjusted operating profit margin of 15.1% (CY2020: 13.9%). Total revenue and adjusted operating profit for the 18 months ended 31 December 2021 was £462.9m and £95.5m respectively. The Group's statutory results for the 18 months ended 31 December 2021 are covered in more detail in our audited financial statements contained herein. Investing in future growth Despite the disruption inflicted on our customers and industry by COVID-19, the long-term opportunities for growth across our markets continue to strengthen and, consistent with the strategic plans we set out in November 2019, we have further invested in our business through the period to capture these opportunities. Our global team increased to approximately 1,750 colleagues by the end of 2021 (31 December 2020: 1,600) and, overall, total adjusted operating costs in CY2021 rose 21% to £167.3m. We also committed a further £47m in capital expenditure (net of landlord contributions) during CY2021 to growth and scaling opportunities across the business, including capitalised product innovation, global footprint enhancements – including the opening of our flagship US site in Waltham, Massachusetts – and the implementation of the final stages of our ERP implementation. Underpinning our invest-to-grow strategy is our robust balance sheet and financial position. Net cash generation from operating activities increased to £62.9m in CY2021 (CY2020: £58.9m) and we ended the period with a small net debt position of £24.1m. Operational leverage and increased profitability As expected, over the last two years the Group's profit margins have been suppressed by the effects of both COVID-19 and the implementation of the Group's five-year growth plan. Many of our major investment plans are now substantially complete, and as we look forward, we expect to see the rate of investment reduce and the resultant delivery of operational leverage as the value of our investments are realised. We are pleased with the progress made over the most recent six-month period, where our adjusted operating margin (excluding share-based payments) was 20.3% as compared to 17.8% for the first six months of CY2021 (or 16.5% in H2 compared to 13.3% in H1 on a ‘like-for-like' basis, including share-based payments relating to pre-2021 share plans). As we look forward, we expect this operating leverage to continue to levels consistent with those levels laid out in our five-year growth plan, with a goal to reach over 30% in CY2024. Acquisition of BioVision In July 2021, we announced the signing of an agreement to acquire BioVision for $340m on a cash-free, debt-free basis. The purchase closed in October 2021, and we are now working on the integration, building on our combined expertise, and enhancing our presence in cell based and metabolic assays. To support the financing of the acquisition, we drew down approximately £120m on our revolving credit facility in October 2021. US Nasdaq listing The Group successfully added a secondary US listing on Nasdaq in October 2020, supplementing its existing admission to trading on the London Stock Exchange's AIM market whilst raising approximately £127m ($180m). The listing supports the Group's plans to enhance liquidity in our shares, attract a greater number of US-based life science and growth investors and provide the Group with an acquisition currency in the US market. We were pleased with the demand for the offering from long-term, life science investors. Interest has grown since, with the number of American Depository Receipts (ADRs) in issue doubling. The board continues to review options to increase share liquidity and to ensure investor demand is met, and intends to consult with shareholders on these options in due course. Outlook, 2022 guidance and long-term goals to 2024 We have made good progress in many areas during the year and our top line performance has seen good momentum coming out of the pandemic. Whilst short-term returns on our core business have inevitably been reduced by COVID-19 and our investments, I am confident in a continuation of the trajectory we have seen over the last six months, and the potential return our organic and inorganic investments will generate over the medium- and long-term. CY2022 Guidance Global lab activity continues to recover, though some uncertainty remains, with trading performance in the first two months of CY2022 in line with our expectations. For CY2022 overall, we currently estimate total reported revenue to increase by approximately 20% on a constant exchange rate basis, including the impact from the acquisition of BioVision, with organic CER growth of mid-teens. We expect continued adjusted gross margin improvement through CY2022, due to the contribution of higher margin in-house products and the full year effect of BioVision transaction. Total adjusted operating costs (including depreciation and amortisation) are expected to grow at a mid-teens percentage rate, as we slow the rate of investment and leverage our recent investments. Long-term goals to CY2024The Group expects to deliver improving operating leverage as the pace of investment graduates. We are increasing our 2024 revenue goal by £25m to £450m-£525m, adjusting to incorporate BioVision and our current operating performance. Our adjusted operating margin and ROCE targets remain unchanged. This commentary represents management's current estimates and is subject to change. See the Cautionary statement regarding forward-looking statements on page 3 of this release. Summary Performance   Reported Results   Adjusted Results   18 months ended 31 Dec 2021 (audited)£m 12 months ended 30 June 2020 (audited, restated) £m 12 months ended 31Dec 2021(unaudited)£m 12 months ended 31Dec 2020 (unaudited)£m   18 months ended 31 Dec 2021 (audited)£m 12 months ended 30 June 2020 (audited, restated) £m 12 months ended 31Dec 2021 (unaudited)£m 12 months ended 31Dec 2020 (unaudited) £m Revenue 462.9 260.0 315.4 269.3   462.9 260.0 315.4 269.3                     Gross profit 329.2 180.2 224.6 188.5   332.3 180.2 227.7 188.5 Gross profit margin (%) 71.1% 69.3% 71.2% 70.0%   71.8% 69.3% 72.2% 70.0%                     Operating profit 24.4 10.4 7.1 1.0   95.5 54.0 60.4 50.6 Operating profit margin (%) 5.3% 4.0% 2.3% 0.4%   20.6% 20.8% 19.2% 18.8%                     Earnings per share                   Basic earnings / (loss) per share 7.7p 6.0p 1.9p (0.4)p   33.2p 20.5p 20.8p 18.0p Diluted earnings / (loss) per share 7.6p 6.0p 1.9p (0.4)p   32.9p 20.3p 20.6p 17.8p                     Net (debt)/cash at end of the year1 (24.1) 80.9 (24.1) 211.9   (24.1) 80.9 (24.1) 211.9 Return on Capital Employed 3.1% 1.6% 0.9% 0.1%   12.0% 8.3% 7.6% 6.6% 1. Excludes lease liabilities Calendar Year Results The Group has prepared the following Calendar Year results to enable a more consistent like-for-like review of the trading performance of the business. The Calendar Year results are an Alternative Performance Measure and cover the trading period for the 12 months ended 31 December 2021 (CY2021) compared with the 12 months ended 31 December 2020 (CY2020). The basis of preparation applied to the Calendar Year results together with a reconciliation to the Group's Statutory IFRS Results are provided at the end of this report. Consolidated statement of profit and loss for the 12 months ended 31 December   CY2021(unaudited)   CY2020(unaudited) £m Adjusted Adjusting items Reported   Adjusted Adjusting items Reported Revenue 315.4 - 315.4   269.3 - 269.3 Cost of sales (87.7) (3.1) (90.8)   (80.8) - (80.8) Gross profit 227.7 (3.1) 224.6   188.5 - 188.5 Selling, general and administrative expenses (150.6) (39.1) (189.7)   (120.6) (23.9) (144.5) Research and development expenses (16.7) (11.1) (27.8)   (17.3) (25.7) (43.0) Operating profit 60.4 (53.3) 7.1   50.6 (49.6) 1.0 Finance income 0.3 - 0.3   0.4 - 0.4 Finance costs (2.7) - (2.7)   (3.6) - (3.6) Profit / (loss) before tax 58.0 (53.3) 4.7   47.4 (49.6) (2.2) Tax credit / (charge) (10.8) 10.5 (0.3)   (8.8) 10.1 1.3 Profit / (loss) for the financial period 47.2 (42.8) 4.4   38.6 (39.5) (0.9) Consolidated cashflow statement for the 12 months ended 31 December £m CY2021(unaudited) CY2020(unaudited) Operating cash flows before working capital 68.2 63.0 Change in working capital 4.0 (7.8) Cash generated from operations 72.2 55.2 Income taxes paid (9.3) 3.7 Net cash inflow from operating activities 62.9 58.9 Net cash inflow / (outflow) from investing activities (291.5) (153.7) Net cash inflow from financing activities 111.4 116.0 Net (decrease) / increase in cash and cash equivalents (117.2) 21.2 Cash and cash equivalents at beginning of period 211.9 189.9 Effect of foreign exchange rates 0.4 0.8 Cash and cash equivalents at end of the period 95.1 211.9       Free Cash Flow * 6.0 5.6 * Free Cash Flow comprises net cash generated from operating activities less net capital expenditure, cash flows relating to committed capital expenditure and outflows in respect of lease obligations Financial review Revenue   18 months ended 31 Dec 2021 (audited)£m 12 months ended 30 Jun 2020 (audited) £m   12 months ended 31 Dec 2021 (unaudited)£m 12 months ended 31 Dec 2020 (unaudited)£m 12 month % Change CER CY2021 % Split** Catalogue revenue by region               The Americas 163.7 96.8   112.4 95.3 26% 38% EMEA 121.5 68.4   82.3 73.2 15% 28% China 84.4 39.1   57.1 42.7 34% 19% Japan 28.4 18.8   18.6 19.3 5% 6% Rest of Asia Pacific 34.8 20.0   23.4 21.0 17% 8% Catalogue revenue sub-total* 432.8 243.1   293.8 251.5 22% 100% In-house catalogue revenue* 245.0 114.4   171.5 128.8 39% 58% Third party catalogue revenue 187.8 128.7   122.3 122.7 4% 42%                 Custom products and services 8.4 6.3   5.7 5.7 6% 30% IVD 8.9 4.7   6.3 5.9 15% 33% Royalties and licenses 10.2 5.9   7.0 6.2 20% 37% Custom Products & Licensing (CP&L) sub-total 27.5 16.9   19.0 17.8 14% 100%                 BioVision 2.6 -   2.6 -     Total reported revenue 462.9 260.0   315.4 269.3 22%   * Includes BioVision product sales sold through Abcam channels post closing of the transaction on 26 October 2021 but excludes incremental BioVision sales sold through non-Abcam channels of £2.6m. ** Numbers may not add up due to rounding In the 18-month statutory reporting period ended 31 December 2021, the Group generated revenue of £462.9m, which represents an increase of 78% on the results for the 12 months ended 30 June 2020, reflecting the extended accounting period. The Directors believe underlying business performance is better understood by comparing the performance for the 12 months ended 31 December 2021 (CY2021) and the 12 months ended 31 December 2020 (CY2020). In CY2021 revenue was £315.4m, representing CER growth of 22% and reported growth of 17%, after a 5%pt headwind from foreign currency exchange. The acquisition of BioVision added approximately 1%pt to revenue growth. Revenue growth continues to be driven by a recovery in laboratory activity from the depressed levels experienced in 2020 due to the COVID-19 pandemic, and by increasing demand for our growing portfolio of in-house products. Catalogue revenue grew 23% CER in CY2021 compared with CY2020 (18% reported), with revenue growth from our in-house products of 41% CER including BioVision (35% reported) or 36% CER excluding BioVision. Except for Japan, which suffered greater COVID-19 related disruption, all major territories grew at double digit rates, with China, which now accounts for 19.4% of revenue, the fastest growing region with CER growth of 34%. Custom Products & Licensing (‘CP&L') revenue, rose 14% on a CER basis (7% reported). Within CP&L, IVD and royalty and license sales grew double digit on a CER basis as the number of out-licensed products and commercial deals continues to grow, whilst custom projects returned to growth as customer activity levels improved following a more muted period of activity due to COVID-19. Gross margin   18 months ended 31 Dec 2021 (audited)% 12 months ended 30 Jun 2020 (audited)%   12 months ended 31 Dec 2021 (unaudited)% 12 months ended 31 Dec 2020 (unaudited)% Reported Gross Margin 71.1 69.3   71.2 70.0 Amortisation of fair value adjustments 0.7 -   1.0 - Adjusted Gross Margin 71.8 69.3   72.2 70.0 Reported gross margin for the 18 months ended 31 December 2021 was 71.1%. Reported gross margin for the period was impacted by the fair value adjustment of BioVision inventory following the acquisition, totaling £6.0m. Approximately half, or £3.1m, of this cost was amortised in the period, with the balance of £2.9m to be amortised in CY2022. Before this impact, adjusted gross margin for CY2021 increased by just over 2 percentage points to 72.2% (CY2020: 70.0%), reflecting a favourable movement in product mix towards high margin in-house products, as well as volume leverage resulting from the increase in revenue. In-house product sales (including CP&L revenue) contributed 61% of total revenue in CY2021 (CY2020: 54%). Operating profit Operating profit for CY2021 increased to £7.1m (CY2020: £1.0m). Adjusted operating profit for the same 12-month period increased to £60.4m (CY2020: £50.6m), representing an adjusted operating profit margin of 19.2% (CY2020: 18.8%) reflecting the Group's planned investment, the impact of COVID-19, and the step up in depreciation and amortisation. The calculation of adjusted operating profit has been updated to exclude share-based payments of £20.0m and £13.3m in CY2021 and CY2020 respectively. A reconciliation between reported and adjusted operating profit is provided in note 4 to the financial statements. Reported operating profit for the 18 months ended 31 December 2021 was £24.4m (12 months to 30 June 2020: £10.4m). Operating costs and expenses   Reported   Adjusted*   18 months ended 31 Dec 2021 (audited)£m 12 months ended 30 June 2020 (audited, restated) £m 12 months ended 31 Dec 2021 (unaudited) £m 12 months ended 31 Dec 2020 (unaudited)£m   18 months ended 31 Dec 2021 (audited)£m 12 months ended 30 June 2020 (audited, restated)£m 12 months ended 31 Dec 2021 (unaudited)£m 12 months ended 31 Dec 2020 (unaudited)£m Selling, general & administrative (263.3) (131.5) (189.7) (144.5)   (211.5) (111.5) (150.6) (120.6) Research and development (41.5) (38.3) (27.8) (43.0)   (25.3) (14.7) (16.7) (17.3) Total operating costs and expenses (304.8) (169.8) (217.5) (187.5)   (236.8).....»»

Category: earningsSource: benzingaMar 14th, 2022

6 telenovelas Netflix is launching this year as it looks to boost slow growth in Latin America

The Colombian hit "Café con Aroma de Mujer" is one of Netflix's most popular series right now and one of its biggest international shows ever. "Café con Aroma de Mujer"Netflix Netflix recently detailed six upcoming telenovelas that have release dates or are in production. Netflix is looking to combat slowing subscriber growth in regions like Latin America. The Colombian hit "Café con Aroma de Mujer" is currently one of Netflix's most popular shows. Netflix is ramping up its output of telenovelas as it faces slowing growth in Latin America. During the company's Q4 2021 earnings call last month, CFO Spencer Neumann cited "macroeconomic strain" from the coronavirus pandemic in markets like Latin America as a reason for why the company's growth has slowed. It gained 8.3 million subscribers in the fourth quarter, below projections.Soon after, the company's head of content for Latin America, Roberto Stopello, highlighted upcoming Netflix novelas in a blog post, including the third season of "Who Killed Sara?""A Netflix novela pairs the best of series with the best of novelas — taking so much of what we love from the novelas we grew up watching, combined with the edge, pace and freedom of the streaming world," Stopello wrote. The announcement came on the heels of a hit Colombian Netflix series, "Café con Aroma de Mujer," which has been one of the service's top shows in recent weeks since debuting in December (it's not available on Netflix in the US, where is airs on Telemundo and streams on Peacock, both owned by NBCUniversal).The series is Netflix's fifth biggest international series of all time with 326.91 million hours viewed in its first month.Below are six upcoming novelas Stopello detailed in his blog post, including descriptions provided by Netflix:"Pálpito" — available April 6NetflixDescription: "In this Colombian production, Simon's wife is murdered in order to extract her heart and transplant it to Camila, the wife of a wealthy man. In search of revenge, Simon immerses himself in the dangerous world of organ trafficking. In his frantic search, destiny will make him fall in love with Camila, the woman who survived thanks to his murdered wife's heart. The ultimate climax will be reached when they both discover the truth.""Who Killed Sara?" season three — available June 1NetflixDescription: "Just when we thought we knew who planned to have Sara killed, everything changed during the final scene of the second season when Nicandro mentions that it was not Marifer but 'us' who killed her. Who is behind the truth? Who really killed Sara?""Donde Hubo Fuego" — available this yearNetflixDescription: "Created by José Ignacio Valenzuela 'El Chascas,' the force behind the worldwide success '¿Quién mató a Sara?,' the Mexican novela 'Donde hubo fuego' is a homage to those women and men who put their life on the line to save us. Through its stellar cast, that includes Eduardo Capetillo, Itatí Cantoral, Iván Amozurrutia, Antonio Sotillo, Polo Morín, Daniel Gama, Humberto Busto, Oka Giner, Plutarco Haza and Esmeralda Pimentel, among others, we'll be witness to what occurs on the inside and outside of a fire station.""Rebelde" season two — available this yearNetflixDescription: "The second season of 'Rebelde' will arrive this year along with the entry of Okane, a new student played by the Mexican musician, singer and producer Saak, who will set the EWS on fire.""Triada" — in productionDescription: "Maite Perroni and the creator of 'Dark Desire,' Leticia López Margalli are back and full of drama and mystery. Both find themselves in preparation of Triada under the Argos production, a new project where the characters immerse themselves in their own past, to decipher, one by one, the secrets of their lives.""Madre de alquiler" — starts production this monthNetflixDescription: "In 'Madre de alquiler,' a young indigenous woman (starring Shaní Lozano) surrogates her womb to a powerful family. Years later, she will discover that everything she believed about her pregnancy was a lie. In this story, produced by Argos, the protagonist will question the significance of motherhood, whilst living a romance full of contradictions in the midst of a society full of prejudice."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderFeb 7th, 2022

Futures Tread Water With Traders Spooked By Spike In Yields

Futures Tread Water With Traders Spooked By Spike In Yields After futures rose to a new all time high during the Tuesday overnight session, the mood has been decided more muted after yesterday's sharp rates-driven tech selloff, and on Wednesday U.S. futures were mixed and Nasdaq contracts slumped as investors once again contemplated the effect of expected rate hikes on tech stocks with lofty valuations while waiting for the release of Federal Reserve minutes at 2pm today. At 730am, Nasdaq 100 futures traded 0.3% lower amid caution over the impact of higher yields on equity valuations, S&P 500 Index futures were down 0.1%, while Europe’s Stoxx 600 gauge traded near a record high. The dollar weakened, as did bitcoin, while Brent crude rose back over $80. “The sharp rise in U.S. yields this week has sparked a move from growth to value,” said Jeffrey Halley, senior market analyst at Oanda Asia Pacific. “Wall Street went looking for the winners in an inflationary environment and as a result, loaded up on the Dow Jones at the expense of the Nasdaq.” Concerns related to the pandemic deepened as Hong Kong restricted dining-in, closed bars and gyms and banned flights from eight countries including the U.S. and the U.K. to slow the spread of the omicron variant. Meanwhile, a selloff in technology stocks extended to Asia, where the Hang Seng Tech Index tumbled as much as 4.2%, sending the gauge toward a six-year low. Traders are now caught in a quandary over deepening fears on global growth combined with a faster tightening by the Federal Reserve. “Earlier we thought that rate hikes wouldn’t be on the table until mid-2022 but the Fed seems to have worked up a consensus to taper faster and hike sooner rather than later,” Steve Englander, head of global G-10 FX research at Standard Chartered, said in a note. “But we don’t think inflation dynamics will support continued hiking. We suspect the biggest driver of asset markets will be when inflation and Covid fears begin to ebb.” Data on Tuesday showed mixed signs on U.S. inflation. Prices paid by manufacturers in December came in sharply lower than expected. However, figures showing a faster U.S. job quit rate added to concerns over wage inflation. With 4.5 million Americans leaving their jobs in November, compared with 10.6 million available positions, the odds increased the Fed will struggle to influence the employment numbers increasingly dictated by social reasons. The data came before Friday’s monthly report from the Labor Department, currently forecast to show 420,000 job additions in December. In premarket trading, tech giants Tesla, Nvidia and Advanced Micro Devices were among the worst performers. Pfizer advanced in New York premarket trading after BofA Global Research recommended the stock. Shares of Chinese companies listed in the U.S. extended their decline after Tencent cut its stake in gaming and e-commerce company Sea, triggering concerns of similar actions at other firms amid Beijing’s regulatory crackdown on the technology sector. Alibaba (BABA US) falls 1.2%, Didi (DIDI US) -1.8%. Here are the other notable premarket movers: Shares in electric vehicle makers fall in U.S. premarket trading, set to extend Tuesday’s losses, amid signs of deepening competition in the sector. Tesla (TSLA US) slips 1.1%, Rivian (RIVN US) -0.6%. Beyond Meat (BYND US) shares jump 8.9% premarket following a CNBC report that Yum! Brands’ KFC will launch fried chicken made with the company’s meat substitute. Recent selloff in Pinterest (PINS US) shares presents an attractive risk/reward, with opportunities for the social media company largely unchanged, Piper Sandler writes in note as it upgrades to overweight. Stock gains 2.3% in premarket trading. Senseonics Holdings (SENS US) shares rise 15% premarket after the medical technology company said it expects a U.S. Food and Drug Administration decision in weeks on an updated diabetes- monitoring system. MillerKnoll (MLKN US) shares were down 3.1% in postmarket trading Tuesday after reporting fiscal 2Q top and bottom line results that missed analysts’ estimates. Annexon (ANNX US) was down 23% postmarket Tuesday after results were released from an experimental therapy for a fatal movement disorder called Huntington’s disease. Three patients in the 28- person trial discontinued treatment due to drug-related side- effects. Wejo Group (WEJO US) shares are up 34% premarket after the company said it’s developing the Wejo Neural Edge platform to enable intelligent handling of data from vehicles at scale. Smart Global (SGH US) falls 6% postmarket Tuesday after the computing memory maker forecast earnings per share for the second quarter. The low end of that forecast missed the average analyst estimate. Beyond Meat (BYND) shares surge premarket after CNBC KFC launch report UBS cut the recommendation on Adobe Inc. (ADBE US) to neutral from buy, citing concerns over the software company’s 2022 growth prospects. Shares down 2% in premarket trading. Oncternal Therapeutics (ONCT US) shares climb 5.1% premarket after saying it reached consensus with the FDA on the design and major details of the phase 3 superiority study ZILO-301 to treat mantle cell lymphoma. In Europe, the energy, chemicals and car industries led the Stoxx Europe 600 Index up 0.2% to near an all-time high set on Tuesday. The Euro Stoxx 50 rises as much as 0.6%, DAX outperforms. FTSE 100 lags but rises off the lows to trade up 0.2%. Nestle dropped 2.4%, slipping from a record, after Jefferies cut the Swiss food giant to underperform. Utilities were the worst-performing sector in Europe on Wednesday as cyclical areas of the market are favored over defensives, while Uniper and Fortum fall following news of a loan agreement.  Other decliners include RWE (-2.4%), Endesa (2.1%), Verbund (-1.3%), NatGrid (-1.2%), Centrica (-1.2%). Earlier in the session, technology shares led a decline in Asian equity markets, with investors concerned about the prospects of higher interest rates and Tencent’s continued sale of assets. The MSCI Asia Pacific Index fell as much as 0.6%, the most in two weeks, dragged down by Tencent and Meituan. The rout in U.S. tech spilled over to Asia, where the Hang Seng Tech Index plunged 4.6%, the most since July, following Tencent’s stake cut in Singapore’s Sea. Declines in tech and other sectors in Hong Kong widened after the city tightened rules to curb the spread of the omicron variant. Most Asian indexes fell on Wednesday, with Japan an exception among major markets as automakers offered support. The outlook for tighter monetary policy in the U.S. and higher Treasury yields weighed on the region’s technology shares, prompting a rotation from growth to value stocks.   Read: China Tech Selloff Deepens as Tencent Sale Spooks Traders Asian equities have underperformed U.S. and European peers amid slower recoveries and vaccination rates in the past year. With omicron rapidly gaining a foothold in Asia, there is a risk of “any further restriction measures, which could cloud the services sector outlook, along with disruption to supply chains,” said Jun Rong Yeap, a strategist at IG Asia Pte.  Philippine stocks gained as trading resumed following a one-day halt due to a systems glitch. North Korea appeared to have launched its first ballistic missile in about two months, just days after leader Kim Jong Un indicated that returning to stalled nuclear talks with the U.S. was a low priority for him in the coming year. India’s key equity gauges posted their longest run of advances in more than two moths, driven by a rally in financial stocks on hopes of revival in lending on the back of capex spending in the country. The S&P BSE Sensex rose 0.6% to 60,223.15 in Mumbai, its highest since Nov. 16, while the NSE Nifty 50 Index advanced 0.7%. Both benchmarks stretched their winning run to a fourth day, the longest since Oct. 18. All but six of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of banking firms. “I believe from an uncertain, volatile environment, the Nifty is now headed for a directional move,” Sahaj Agrawal, a head of derivative research at Kotak Securities, writes in a note. The Nifty 50 crossed a significant barrier of the 17,800 level and is now expected to trade at 19,000-19,500 level in the medium term, Agrawal added. HDFC Bank contributed the most to the Sensex’s gain, increasing 2.4%. Out of 30 shares in the Sensex, 18 rose, while 12 fell In FX, Bloomberg Dollar Spot index slpped 0.2% back toward Tuesday’s lows, falling as the greenback was weaker against most of its Group-of-10 peers, SEK and JPY are the best performers in G-10, CAD underperforms. Scandinavian currencies and the yen led gains, though most G-10 currencies were trading in narrow ranges. Australia’s dollar reversed an Asia-session loss in European trading. The yen rebounded from a five-year low as investors trimmed short positions on the haven currency and amid a decline in Asian stock markets. Treasuries were generally flat in overnight trading, with the curve flatter into early U.S. session as long-end outperforms, partially unwinding a two-day selloff to start the year with Tuesday witnessing a late block sale in ultra-bond futures. 10-year yields traded as high as 1.650% ahead of the US open after being mostly flat around 1.645%; yields were richer by up to 2bp across long-end of the curve while little change from front-end out to belly, flattening 2s10s, 5s30s spreads by 0.5bp and 1.8bp; gilts outperformed in the sector by half basis point. Focus expected to continue on IG issuance, which has impacted the market in the past couple of days, and in U.S. afternoon session FOMC minutes will be released. IG dollar issuance slate includes EIB $5B 5-year SOFR and Reliance Ind. 10Y/30Y/40Y; thirteen borrowers priced $23.1b across 30 tranches Tuesday, making it the largest single day volume for U.S. high-grade corporate bonds since first week of September. European peripheral spreads widen to core. 30y Italy lags peers, widening ~2bps to Germany with order books above EU43b at the long 30y syndication. Ten-year yields shot up 8bps in New Zealand as its markets reopened following the New Year holiday. Aussie yields advanced 4bps. A 10-year sale in Japan drew a bid-cover ratio of 3.46. In commodities, crude futures were range-bound with WTI near just below $77, Brent nearer $80 after OPEC+ agreed to revive more halted production as the outlook for global oil markets improved, with demand largely withstanding the new coronavirus variant. Spot gold puts in a small upside move out of Asia’s tight range to trade near $1,820/oz. Base metals are mixed. LME nickel lags, dropping over 2%; LME aluminum and lead are up ~0.8%.  Looking at the day ahead, data releases include the December services and composite PMIs from the Euro Area, Italy, France, Germany and the US. On top of that, there’s the ADP’s December report of private payrolls from the US, the preliminary December CPI report from Italy, and December’s consumer confidence reading from France. Separately from the Federal Reserve, we’ll get the minutes of the December FOMC meeting. Market Snapshot S&P 500 futures little changed at 4,783.25 MXAP down 0.4% to 193.71 MXAPJ down 0.9% to 626.67 Nikkei up 0.1% to 29,332.16 Topix up 0.4% to 2,039.27 Hang Seng Index down 1.6% to 22,907.25 Shanghai Composite down 1.0% to 3,595.18 Sensex up 0.7% to 60,300.47 Australia S&P/ASX 200 down 0.3% to 7,565.85 Kospi down 1.2% to 2,953.97 STOXX Europe 600 up 0.1% to 494.52 German 10Y yield little changed at -0.09% Euro up 0.2% to $1.1304 Brent Futures down 0.4% to $79.72/bbl Gold spot up 0.3% to $1,819.73 U.S. Dollar Index down 0.13% to 96.13 Top Overnight News from Bloomberg The U.S. yield curve’s most dramatic steepening in more than three months has little to do with traders turning more optimistic on the economy or betting on a more aggressive timetable for raising interest rates The surge in euro-area inflation that surprised policy makers in recent months is close to its peak, according to European Central Bank Governing Council member Francois Villeroy de Galhau Some Bank of Japan officials say it’s likely the central bank will discuss the possible ditching of a long-held view that price risks are mainly on the downward side at a policy meeting this month, according to people familiar with the matter Turkish authorities are keeping tabs on investors who are buying large amounts of foreign currency and asked banks to deter their clients from using the spot market for hedging-related trades as they struggle to contain the lira’s slide Italy is trying to lock in historically low financing costs at the start of a year where inflationary and political pressures could spell an end to super easy borrowing conditions North Korea appears to have launched its first ballistic missile in about two months, after leader Kim Jong Un indicated he was more interested in bolstering his arsenal than returning to stalled nuclear talks with the U.S. A More detailed breakdown of overnight news from Newsquawk Asia-Pac equities traded mostly in the red following the mixed handover from Wall Street, where the US majors maintained a cyclical bias and the NDX bore the brunt of another sizeable Treasury curve bear-steepener. Overnight, US equity futures resumed trade with mild losses and have since been subdued, with participants now gearing up for the FOMC minutes (full Newsquawk preview available in the Research Suite) ahead of Friday’s US jobs report and several scheduled Fed speakers. In APAC, the ASX 200 (-0.3%) was pressured by its tech sector, although the upside in financials cushioned some losses. The Nikkei 225 (+0.1%) was kept afloat by the recent JPY weakness, whilst Sony Group rose some 4% after its chairman announced EV ambitions. The KOSPI (-1.2%) was dealt a blow as North Korea fired a projectile that appeared to be a ballistic missile, but this landed outside of Japan’s Exclusive Economic Zone (EEZ). The Hang Seng (-1.6%) saw its losses accelerate with the Hang Seng Tech Index tumbling over 4% as the sector tackled headwinds from Wall Street alongside domestic crackdowns. China Huarong Asset Management slumped over 50% as it resumed trade following a nine-month halt after its financial failure. The Shanghai Comp. (-1.0%) conformed to the mostly negative tone after again seeing a hefty liquidity drain by the PBoC. In the debt complex, the US T-note futures held a mild upside bias since the resumption of trade, and the US curve was somewhat steady. Participants also highlighted large short-covering heading into yesterday’s US close ahead of the FOMC minutes. Top Asian News Asian Stocks Slide as Surging Yields Squeeze Technology Sector China’s Growth Forecast Cut by CICC Amid Covid Outbreaks BOJ Is Said to Discuss Changing Long-Held View on Price Risks Gold Holds Gain With Fed Rate Hikes and Treasury Yields in Focus European equities (Stoxx 600 +0.1%) trade mixed in what has been a relatively quiet session thus far with the final readings of Eurozone services and composite PMIs providing little in the way of fresh impetus for prices. The handover from the APAC region was predominantly a soft one with Chinese bourses lagging once again with the Hang Seng Tech Index tumbling over 4% as the sector tackled headwinds from Wall Street alongside domestic crackdowns. Meanwhile, the Shanghai Comp. (-1%) conformed to the mostly negative tone after again seeing a hefty liquidity drain by the PBoC. Stateside, the ES and RTY are flat whilst the NQ lags once again after yesterday bearing the brunt of another sizeable treasury curve bear-steepener. In terms of house views, analysts at Barclays expect “2022 to be a more normal yet positive year for equities, looking for high single-digit upside and a broader leadership”. Barclays adds that it remains “pro-cyclical (Industrials, Autos, Leisure, reopening plays and Energy OW), and prefer Value to Growth”. Elsewhere, analysts at Citi stated that “monetary tightening may push up longer-dated nominal/real bond yields, threatening highly rated sectors such as IT or Luxury Goods. Alternatively, higher yields could help traditional value trades such as UK equities and Pan-European Financials”. Sectors in Europe are mostly higher, with auto names leading as Renault (+3.4%) sits at the top of the CAC, whilst Stellantis (+0.6%) has seen some support following the announcement that it is planning for a full battery-electric portfolio by 2028. Elsewhere, support has also been seen for Chemicals, Oil & Gas and Banking names with the latter continuing to be supported by the current favourable yield environment. To the downside, Food and Beverage is the clear laggard amid losses in Nestle (-2.6%) following a broker downgrade at Jefferies. Ocado (+5.5%) sits at the top of the Stoxx 600 after being upgraded to buy at Berenberg with analysts expecting the Co. to sign further deals with new and existing grocery e-commerce partners this year. Finally, Uniper (-2.4%) sits near the bottom of the Stoxx 600 after securing credit facilities totalling EUR 10bln from Fortum and KfW. Top European News U.K. Weighs Dropping Covid Test Mandate for Arriving Travelers German Energy Giant Uniper Gets $11 Billion for Margin Calls European Gas Extends Rally as Russian Shipments Remain Curbed Italian Inflation Hits Highest in More Than a Decade on Energy In FX, notwithstanding Tuesday’s somewhat mixed US manufacturing ISM survey and relatively hawkish remarks from Fed’s Kashkari, the week (and year) in terms of data and events really begins today with the release of ADP as a guide for NFP and minutes of the December FOMC that confirmed a faster pace of tapering and more hawkish dot plots. As such, it may not be surprising to see the Buck meandering broadly and index settling into a range inside yesterday’s parameters with less impetus from Treasuries that have flipped from a severe if not extreme bear-steepening incline. Looking at DXY price action in more detail, 96.337 marks the top and 96.053 the bottom at present, and from a purely technical perspective, 96.098 remains significant as a key Fib retracement level. JPY/EUR/AUD/GBP/NZD - All taking advantage of the aforementioned Greenback fade, and with the Yen more eager than others to claw back lost ground given recent underperformance. Hence, Usd/Jpy has retreated further from multi-year highs and through 116.00 to expose more downside potential irrespective of latest reports via newswire sources suggesting the BoJ is expected to slightly revise higher its inflation forecast for the next fiscal year and downgrade the GDP outlook for the year ending in March. Similarly, the Euro is having another look above 1.1300 even though EZ services and composite PMIs were mostly below consensus or preliminary readings and German new car registrations fell sharply, while the Aussie is retesting resistance around 0.7250 and its 50 DMA with some assistance from firm copper prices, Cable remains underpinned near 1.3550 and the 100 DMA and the Kiwi is holding mainly above 0.6800 in the face of stronger Aud/Nzd headwinds. Indeed, the cross is approaching 1.0650 in contrast to Eur/Gbp that is showing signs of changing course following several bounces off circa 0.8333 that equates to 1.2000 as a reciprocal. CHF/CAD - The Franc and Loonie appear a bit less eager to pounce on their US peer’s retrenchment, as the former pivots 0.9150 and latter straddles 1.2700 amidst a downturn in crude pre-Canadian building permits and new house prices. SCANDI/EM - Little sign of any fallout from a slowdown in Sweden’s services PMI as overall risk sentiment remains supportive for the Sek either side of 10.2600 vs the Eur, but the Nok is veering back down towards 10.0000 in line with slippage in Brent from Usd 80+/brl peaks reached on Tuesday. Elsewhere, the Zar is shrugging off a sub-50 SA PMI as Gold strengthens its grip on the Usd 1800/oz handle and the Cnh/Cny are still underpinned after another PBoC liquidity drain and firmer than previous midpoint fix on hopes that cash injections might be forthcoming through open market operations into the banking system from the second half of January to meet rising demand for cash, according to China's Securities Journal. Conversely, the Try has not derived any real comfort from comments by Turkey’s Finance Minister underscoring its shift away from orthodox policies, or insistence that budget discipline will not be compromised. In commodities, crude benchmarks are currently little changed but have been somewhat choppy within a range shy of USD 1/bbl in European hours, in-spite of limited fresh newsflow occurring. For reference, WTI and Brent reside within USD 77.26-76.53/bbl and USD 80.25-79.56/bbl parameters respectively. Updates for the complex so far include Cascade data reporting that gas flows via the Russian Yamal-Europe pipeline in an eastward direction have reduced. As a reminder, the pipeline drew scrutiny in the run up to the holiday period given reverse mode action, an undertaking the Kremlin described as ‘operational’ and due to a lack of requests being placed. Separately, last nights private inventories were a larger than expected draw, however, the internals all printed builds which surpassed expectations. Today’s EIA release is similar expected to show a headline draw and builds amongst the internals. Elsewhere, and more broadly, geopolitics remain in focus with Reuters sources reporting that a rocket attack has hit a military base in proximity to the Baghdad airport which hosts US forces. Moving to metals, spot gold and silver are once again fairly contained though the yellow metal retains the upside it derived around this point yesterday, hovering just below the USD 1820/oz mark. US Event Calendar 7am: Dec. MBA Mortgage Applications -5.6%, prior -0.6% 8:15am: Dec. ADP Employment Change, est. 410,000, prior 534,000 9:45am: Dec. Markit US Composite PMI, prior 56.9 9:45am: Dec. Markit US Services PMI, est. 57.5, prior 57.5 2pm: Dec. FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap As you may have seen from my CoTD yesterday all I got for Xmas this year was Omicron, alongside my wife and two of our three kids (we didn’t test Bronte). On Xmas Day I was cooking a late Xmas dinner and I suddenly started to have a slightly lumpy throat and felt a bit tired. Given I’d had a couple of glasses of red wine I thought it might be a case of Bordeaux-2015. However a LFT and PCR test the next day confirmed Covid-19. I had a couple of days of being a bit tired, sneezing and being sniffly. After that I was 100% physically (outside a of bad back, knee and shoulder but I can’t blame that on covid) but am still sniffly today. I’m also still testing positive on a LFT even if I’m out of isolation which tells me testing to get out of isolation early only likely works if you’re completely asymptomatic. My wife was similar to me symptom wise. Maybe slightly worse but she gets flu badly when it arrives and this was nothing like that. The two kids had no real symptoms unless being extremely annoying is one. Indeed spending 10 days cooped up with them in very wet conditions (ie garden activity limited) was very challenging. Although I came out of isolation straight to my home office that was still a very welcome change of scenery yesterday. The covid numbers are absolutely incredible and beyond my wildest imagination a month ago. Yesterday the UK reported c.219k new cases, France c.272k and the US 1.08 million. While these are alarming numbers it’s equally impressive that where the data is available, patients on mechanical ventilation have hardly budged and hospitalisations, while rising, are so far a decent level below precious peaks. Omicron has seen big enough case numbers now for long enough that even though we’ve had another big boost in cases these past few days, there’s nothing to suggest that the central thesis shouldn’t be anything other than a major decoupling between cases and fatalities. See the chart immediately below of global cases for the exponential recent rise but the still subdued levels of deaths. Clearly there is a lag but enough time has passed that suggests the decoupling will continue to be sizeable. It seems the main problem over the next few weeks is the huge number of people self isolating as the variant rips through populations. This will massively burden health services and likely various other industries. However hopefully this latest wave can accelerate the end game for the pandemic and move us towards endemicity faster. Famous last words perhaps but this variant is likely milder, is outcompeting all the others, and our defences are much, much better than they have been (vaccines, immunity, boosters, other therapeutic treatments). Indeed, President Biden directed his team to double the amount of Pfizer’s anti-covid pill Paxlovid they order; he called the pill a game changer. So a difficult few weeks ahead undoubtedly but hopefully light at the end of the tunnel for many countries. Prime Minister Boris Johnson noted yesterday that Britain can ride out the current Omicron wave without implementing any stricter measures, suggesting that learning to live with the virus is becoming the official policy stance in the UK. The head scratcher is what countries with zero-covid strategies will do faced with the current set up. If we’ve learnt anything from the last two years of covid it is that there is almost no way of avoiding it. Will a milder variant change such a stance? Markets seem to have started the year with covid concerns on the back burner as day 2 of 2022 was a lighter version of the buoyant day 1 even if US equities dipped a little led by a big under-performance from the NASDAQ (-1.33%), as tech stocks got hit by higher discount rates with the long end continuing to sell off to start the year. Elsewhere the Dow Jones (+0.59%) and Europe’s STOXX 600 (+0.82%) both climbed to new records, with cyclical sectors generally outperforming once again. Interestingly the STOXX Travel & Leisure index rose a further +3.11% yesterday, having already surpassed its pre-Omicron level. As discussed the notable exception to yesterday’s rally were tech stocks, with a number of megacap tech stocks significantly underperforming amidst a continued rise in Treasury yields, and the rotation towards cyclical stocks as investors take the message we’ll be living with rather than attempting to defeat Covid. The weakness among that group meant that the FANG+ index fell -1.68% yesterday, with every one of the 10 companies in the index moving lower, and that weakness in turn meant that the S&P 500 (-0.06%) came slightly off its record high from the previous session. Showing the tech imbalance though was the fact that the equal weight S&P 500 was +0.82% and 335 of the index rose on the day. So it was a reflation day overall. Staying with the theme, the significant rise in treasury yields we saw on Monday extended further yesterday, with the 10yr yield up another +1.9bps to 1.65%. That means the 10yr yield is up by +13.7bps over the last 2 sessions, marking its biggest increase over 2 consecutive sessions since last September. Those moves have also coincided with a notable steepening in the yield curve, which is good news if you value it as a recessionary indicator, with the 2s10s curve +11.3bps to +88.7bps over the last 2 sessions, again marking its biggest 2-day steepening since last September Those moves higher for Treasury yields were entirely driven by a rise in real yields, with the 10yr real yield moving back above the -1% mark. Conversely, inflation breakevens fell back across the board, with the 10yr breakeven declining more than -7.0bps from an intraday peak of 2.67%, the highest level in more than six weeks, which tempered some of the increase in nominal yields. The decline in breakevens was aided by the release of the ISM manufacturing reading for December, since the prices paid reading fell to 68.2, some way beneath the 79.3 reading that the consensus had been expecting. In fact, that’s the biggest monthly drop in the prices paid measure in over a decade, and leaves it at its lowest level since November 2020. Otherwise, the headline reading did disappoint relative to the consensus at 58.7 (vs. 60.0 expected), but the employment component was above expectations at 54.2 (vs. 53.6 expected), which is its highest level in 8 months and some promising news ahead of this Friday’s jobs report. Staying with US employment, the number of US job openings fell to 10.562m in November (vs. 11.079m expected), but the number of people quitting their job hit a record high of 4.5m. That pushed the quits rate back to its record of 3.0% and just shows that the labour market continues to remain very tight with employees struggling to hire the staff needed. This has been our favourite indicator of the labour market over the last few quarters and it continues to keep to the same trend. Back to bonds and Europe saw a much more subdued movement in sovereign bond yields, although gilts were the exception as the 10yr yield surged +11.7bps as it caught up following the previous day’s public holiday in the UK. Elsewhere however, yields on bunds (-0.2bps), OATs (-1.1bps) and BTPs (+0.9bps) all saw fairly modest moves. Also of interest ahead of tonight’s Fed minutes, there was a story from the Wall Street Journal late yesterday that said Fed officials are considering whether to reduce their bond holdings, and thus beginning QT, in short order. Last cycle, the Fed kept the size of its balance sheet flat for three years after the end of QE by reinvesting maturing proceeds before starting QT. This iteration of QE is set to end in March, so any move towards balance sheet rolloff would be a much quicker tightening than last cycle, which the article suggested was a real possibility. As this cycle has taught us time and again, it is moving much faster than historical precedent, so don’t rely on prior timelines. Balance sheet policy and the timing of any QT will be a major focus in tonight’s minutes, along with any signals for the timing of liftoff and path of subsequent rate hikes. Overnight in Asia markets are trading mostly lower with the KOSPI (-1.45%), Hang Seng (-0.85%), Shanghai Composite (-0.81%) and CSI (-0.67%) dragged down largely by IT stocks while the Nikkei (+0.07%) is holding up better. In China, Tencent cut its stake in a Singapore based company yesterday by selling $ 4 billion worth shares amidst China's regulatory crackdown with investors concerned they will do more. This has helped push the Hang Seng Tech Index towards its lowest close since its inception in July 2020 with Tencent and companies it invested in losing heavily. Moving on, Japan is bringing forward booster doses for the elderly while maintaining border controls in an effort to contain Omicron. Futures are indicating a weaker start in DM markets with the S&P 500 (-0.25%) and DAX (-0.11%) both tracking their Asian peers. Oil prices continued their ascent yesterday, with Brent Crude (+1.20%) hitting its highest level since the Omicron variant first emerged on the scene. Those moves came as the OPEC+ group agreed that they would go ahead with the increase in output in February of 400k barrels per day. And the strength we saw in commodities more broadly last year has also continued to persist into 2022, with copper prices (+1.12%) hitting a 2-month high, whilst soybean prices (+2.49%) hit a 4-month high. Looking at yesterday’s other data, German unemployment fell by -23k in December (vs. -15k expected), leaving the level of unemployment at a post-pandemic low of 2.405m in December. Finally, the preliminary French CPI reading for December came in slightly beneath expectations on the EU-harmomised measure, at 3.4% (vs. 3.5% expected). To the day ahead now, and data releases include the December services and composite PMIs from the Euro Area, Italy, France, Germany and the US. On top of that, there’s the ADP’s December report of private payrolls from the US, the preliminary December CPI report from Italy, and December’s consumer confidence reading from France. Separately from the Federal Reserve, we’ll get the minutes of the December FOMC meeting. Tyler Durden Wed, 01/05/2022 - 08:07.....»»

Category: blogSource: zerohedgeJan 5th, 2022

Futures Rebound From Friday Rout As Omicron Fears Ease

Futures Rebound From Friday Rout As Omicron Fears Ease S&P futures and European stocks rebounded from Friday’s selloff while Asian shares fell, as investors took comfort in reports from South Africa which said initial data doesn’t show a surge of hospitalizations as a result of the omicron variant, a view repeated by Anthony Fauci on Sunday. Meanwhile, fears about a tighter Fed were put on the backburner. Also overnight, China’s central bank announced it will cut the RRR by 50bps releasing 1.2tn CNY in liquidity, a move that had been widely expected. The cut comes as insolvent Chinese property developer Evergrande was said to be planning to include all its offshore public bonds and private debt obligations in a restructuring plan. US equity futures rose 0.3%, fading earlier gains, and were last trading at 4,550. Nasdaq futures pared losses early in the U.S. morning, trading down 0.4%. Oil rose after Saudi Arabia boosted the prices of its crude, signaling confidence in the demand outlook, which helped lift European energy shares. The 10-year Treasury yield advanced to 1.40%, while the dollar was little changed and the yen weakened. “A wind of relief may blow the current risk-off trading stance away this week,” said Pierre Veyret, a technical analyst at U.K. brokerage ActivTrades. “Concerns related to the omicron variant may ease after South African experts didn’t register any surge in deaths or hospitalization.” As Bloromberg notes, the mood across markets was calmer on Monday after last week’s big swings in technology companies and a crash in Bitcoin over the weekend. Investors pointed to good news from South Africa that showed hospitals haven’t been overwhelmed by the latest wave of Covid cases. Initial data from South Africa are “a bit encouraging regarding the severity,” Anthony Fauci, U.S. President Joe Biden’s chief medical adviser, said on Sunday. At the same time, he cautioned that it’s too early to be definitive. Here are some of the biggest U.S. movers today: Alibaba’s (BABA US) U.S.-listed shares rise 1.9% in premarket after a 8.2% drop Friday prompted by the delisting plans of Didi Global. Alibaba said earlier it is replacing its CFO and reshuffling the heads of its commerce businesses Rivian (RIVN US) has the capabilities to compete with Tesla and take a considerable share of the electric vehicle market, Wall Street analysts said as they started coverage with overwhelmingly positive ratings. Shares rose 2.2% initially in U.S. premarket trading, but later wiped out gains to drop 0.9% Stocks tied to former President Donald Trump jump in U.S. premarket trading after his media company agreed to a $1 billion investment from a SPAC Cryptocurrency-exposed stocks tumble amid volatile trading in Bitcoin, another indication of the risk aversion sweeping across financial markets Laureate Education (LAUR US) approved the payment of a special cash distribution of $0.58 per share. Shares rose 2.8% in postmarket Friday AbCellera Biologics (ABCL US) gained 6.2% postmarket Friday after the company confirmed that its Lilly-partnered monoclonal antibody bamlanivimab, together with etesevimab, received an expanded emergency use authorization from the FDA as the first antibody therapy in Covid-19 patients under 12 European equities drifted lower after a firm open. Euro Stoxx 50 faded initial gains of as much as 0.9% to trade up 0.3%. Other cash indexes follow suit, but nonetheless remain in the green. FTSE MIB sees the largest drop from session highs. Oil & gas is the strongest sector, underpinned after Saudi Arabia raised the prices of its crude. Tech, autos and financial services lag. Companies that benefited from increased demand during pandemic-related lockdowns are underperforming in Europe on Monday as investors assess whether the omicron Covid variant will force governments into further social restrictions. Firms in focus include meal-kit firm HelloFresh (-2.3%) and online food delivery platforms Delivery Hero (-5.4%), Just Eat Takeaway (-5.6%) and Deliveroo (-8.5%). Remote access software firm TeamViewer (-3.7%) and Swedish mobile messaging company Sinch (-3.0%), gaming firm Evolution (-4.2%). Online pharmacies Zur Rose (-5.1%), Shop Apotheke (-3.5%). Online grocer Ocado (-2.2%), online apparel retailer Zalando (-1.5%). In Asia, the losses were more severe as investors remained wary over the outlook for U.S. monetary policy and the spread of the omicron variant.  The Hang Seng Tech Index closed at the lowest level since its inception. SoftBank Group Corp. fell as much as 9% in Tokyo trading as the value of its portfolio came under more pressure. The MSCI Asia Pacific Index slid as much as 0.9%, hovering above its lowest finish in about a year. Consumer discretionary firms and software technology names contributed the most to the decline, while the financial sector outperformed.  Hong Kong’s equity benchmark was among the region’s worst performers amid the selloff in tech shares. The market also slumped after the omicron variant spread among two fully vaccinated travelers across the hallway of a quarantine hotel in the city, unnerving health authorities. “People are waiting for new information on the omicron variant,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management in Tokyo. “We’re at a point where it’s difficult to buy stocks.” Separately, China’s central bank announced after the country’s stock markets closed that it will cut the amount of cash most banks must keep in reserve from Dec. 15, providing a liquidity boost to economic growth.  Futures on the Nasdaq 100 gained further in Asia late trading. The underlying gauge slumped 1.7% on Friday, after data showed U.S. job growth had its smallest gain this year and the unemployment rate fell more than forecast. Investors seem to be focusing more on the improved jobless rate, as it could back the case for an acceleration in tapering, Ichikawa said.  Asian equities have been trending lower since mid-November amid a selloff in Chinese technology giants, concern over U.S. monetary policy and the spread of omicron. The risk-off sentiment pushed shares to a one-year low last week.  Overnight, the PBoC cut the RRR by 50bps (as expected) effective 15th Dec; will release CNY 1.2tln in liquidity; RRR cut to guide banks for SMEs and will use part of funds from RRR cut to repay MLF. Will not resort to flood-like stimulus; will reduce capital costs for financial institutions by around CNY 15bln per annum. The news follows earlier reports via China Securities Daily which noted that China could reduce RRR as soon as this month, citing a brokerage firm. However, a separate Chinese press report noted that recent remarks by Chinese Premier Li on the reverse repo rate doesn't mean that there will be a policy change and an Economics Daily commentary piece suggested that views of monetary policy moves are too simplistic and could lead to misunderstandings after speculation was stoked for a RRR cut from last week's comments by Premier Li. Elsewhere, Indian stocks plunged in line with peers across Asia as investors remained uncertain about the emerging risks from the omicron variant in a busy week of monetary policy meetings.   The S&P BSE Sensex slipped 1.7% to 56,747.14, in Mumbai, dropping to its lowest level in over three months, with all 30 shares ending lower. The NSE Nifty 50 Index also declined by a similar magnitude. Infosys Ltd. was the biggest drag on both indexes and declined 2.3%.  All 19 sub-indexes compiled by BSE Ltd. declined, led by a measure of software exporters.  “If not for the new omicron variant, economic recovery was on a very strong footing,” Mohit Nigam, head of portfolio management services at Hem Securities Ltd. said in a note. “But if this virus quickly spreads in India, then we might experience some volatility for the coming few weeks unless development is seen on the vaccine side.” Major countries worldwide have detected omicron cases, even as the severity of the variant still remains unclear. Reserve Bank of Australia is scheduled to announce its rate decision on Tuesday, while the Indian central bank will release it on Dec. 8. the hawkish comments by U.S. Fed chair Jerome Powell on tackling rising inflation also weighed on the market Japanese equities declined, following U.S. peers lower, as investors considered prospects for inflation, the Federal Reserve’s hawkish tilt and the omicron virus strain. Telecommunications and services providers were the biggest drags on the Topix, which fell 0.5%. SoftBank Group and Daiichi Sankyo were the largest contributors to a 0.4% loss in the Nikkei 225. The Mothers index slid 3.8% amid the broader decline in growth stocks. A sharp selloff in large technology names dragged U.S. stocks lower Friday. U.S. job growth registered its smallest gain this year in November while the unemployment rate fell by more than forecast to 4.2%. There were some good aspects in the U.S. jobs data, said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute. “We’re in this contradictory situation where there’s concern over an early rate hike given the economic recovery, while at the same time there’s worry over how the omicron variant may slow the current recovery.” Australian stocks ended flat as staples jumped. The S&P/ASX 200 index closed little changed at 7,245.10, swinging between gains and losses during the session as consumer staples rose and tech stocks fell. Metcash was the top performer after saying its 1H underlying profit grew 13% y/y. Nearmap was among the worst performers after S&P Dow Jones Indices said the stock will be removed from the benchmark as a result of its quarterly review. In New Zealand, the S&P/NZX 50 index fell 0.6% to 12,597.81. In FX, the Bloomberg Dollar Spot Index gave up a modest advance as the European session got underway; the greenback traded mixed versus its Group-of-10 peers with commodity currencies among the leaders and havens among the laggards. JPY and CHF are the weakest in G-10, SEK outperforms after hawkish comments in the Riksbank’s minutes. USD/CNH drifts back to flat after a fairly well telegraphed RRR cut materialized early in the London session.  The euro fell to a day low of $1.1275 before paring. The pound strengthened against the euro and dollar, following stocks higher. Bank of England deputy governor Ben Broadbent due to speak. Market participants will be watching for his take on the impact of the omicron variant following the cautious tone of Michael Saunders’ speech on Friday. Treasury yields gapped higher at the start of the day and futures remain near lows into early U.S. session, leaving yields cheaper by 4bp to 5bp across the curve. Treasury 10-year yields around 1.395%, cheaper by 5bp vs. Friday’s close while the 2s10s curve steepens almost 2bps with front-end slightly outperforming; bunds trade 4bp richer vs. Treasuries in 10-year sector. November's mixed U.S. jobs report did little to shake market expectations of more aggressive tightening by the Federal Reserve. Italian bonds outperformed euro-area peers after Fitch upgraded the sovereign by one notch to BBB, maintaining a stable outlook. In commodities, crude futures drift around best levels during London hours. WTI rises over 1.5%, trading either side of $68; Brent stalls near $72. Spot gold trends lower in quiet trade, near $1,780/oz. Base metals are mixed: LME copper outperforms, holding in the green with lead; nickel and aluminum drop more than 1%. There is nothing on today's economic calendar. Focus this week includes U.S. auctions and CPI data, while Fed speakers enter blackout ahead of next week’s FOMC. Market Snapshot S&P 500 futures up 0.7% to 4,567.50 STOXX Europe 600 up 0.8% to 466.39 MXAP down 0.9% to 189.95 MXAPJ down 1.0% to 617.01 Nikkei down 0.4% to 27,927.37 Topix down 0.5% to 1,947.54 Hang Seng Index down 1.8% to 23,349.38 Shanghai Composite down 0.5% to 3,589.31 Sensex down 1.5% to 56,835.37 Australia S&P/ASX 200 little changed at 7,245.07 Kospi up 0.2% to 2,973.25 Brent Futures up 2.9% to $71.89/bbl Gold spot down 0.2% to $1,780.09 U.S. Dollar Index up 0.15% to 96.26 German 10Y yield little changed at -0.37% Euro down 0.2% to $1.1290 Top Overnight News from Bloomberg Speculators were caught offside in both bonds and stocks last week, increasing their bets against U.S. Treasuries and buying more equity exposure right before a bout of volatility caused the exact opposite moves Inflation pressure in Europe is still likely to be temporary, Eurogroup President Paschal Donohoe said Monday, even if it is taking longer than expected for it to slow China Evergrande Group’s stock tumbled close to a record low amid signs a long-awaited debt restructuring may be at hand, while Kaisa Group Holdings Ltd. faces a potential default this week in major tests of China’s ability to limit fallout from the embattled property sector China Evergrande Group is planning to include all its offshore public bonds and private debt obligations in a restructuring that may rank among the nation’s biggest ever, people familiar with the matter said China tech shares tumbled on Monday, with a key gauge closing at its lowest level since launch last year as concerns mount over how much more pain Beijing is willing to inflict on the sector The U.S. is poised to announce a diplomatic boycott of the Beijing Winter Olympics, CNN reported, a move that would create a new point of contention between the world’s two largest economies SNB Vice President Fritz Zurbruegg to retire at the end of July 2022, according to statement Bitcoin has markedly underperformed rivals like Ether with its weekend drop, which may underscore its increased connection with macro developments Austrians who reject mandatory coronavirus vaccinations face 600-euro ($677) fines, according to a draft law seen by the Kurier newspaper Some Riksbank board members expressed different nuances regarding the asset holdings and considered that it might become appropriate for the purchases to be tapered further next year,  the Swedish central bank says in minutes from its Nov. 24 meeting A more detailed look at global markets courtesy of Newsquawk Asian equities began the week cautiously following last Friday's negative performance stateside whereby the Russell 2000 and Nasdaq closed lower by around 2% apiece, whilst the S&P 500 and Dow Jones saw shallower losses. The Asia-Pac region was also kept tentative amid China developer default concerns and conflicting views regarding speculation of a looming RRR cut by China's PBoC. The ASX 200 (+0.1%) was initially dragged lower by a resumption of the underperformance in the tech sector, and with several stocks pressured by the announcement of their removal from the local benchmark, although losses for the index were later reversed amid optimism after Queensland brought forward the easing of state border restrictions, alongside the resilience in the defensive sectors. The Nikkei 225 (-0.4%) suffered from the currency inflows late last week but finished off worse levels. The Hang Seng (-1.8%) and Shanghai Comp. (-0.5%) were mixed with Hong Kong weighed by heavy tech selling and as default concerns added to the headwinds after Sunshine 100 Holdings defaulted on a USD 170mln bond payment, whilst Evergrande shares slumped in early trade after it received a demand for payments but noted there was no guarantee it will have the sufficient funds and with the grace period for two offshore bond payments set to expire today. Conversely, mainland China was kept afloat by hopes of a looming RRR cut after comments from Chinese Premier Li that China will cut RRR in a timely manner and a brokerage suggested this could occur before year-end. However, other reports noted the recent remarks by Chinese Premier Li on the reverse repo rate doesn't mean a policy change and that views of monetary policy moves are too simplistic which could lead to misunderstandings. Finally, 10yr JGBs were steady after having marginally extended above 152.00 and with prices helped by the lacklustre mood in Japanese stocks, while price action was tame amid the absence of BoJ purchases in the market today and attention was also on the Chinese 10yr yield which declined by more than 5bps amid speculation of a potentially looming RRR cut. Top Asian News SoftBank Slumps 9% Monday After Week of Bad Portfolio News Alibaba Shares Rise Premarket After Rout, Leadership Changes China PBOC Repeats Prudent Policy Stance With RRR Cut China Cuts Reserve Requirement Ratio as Economy Slows Bourses in Europe kicked off the new trading week higher across the board but have since drifted lower (Euro Stoxx 50 +0.1%; Stoxx 600 +0.3%) following a somewhat mixed lead from APAC. Sentiment across markets saw a fleeting boost after the Asia close as China’s central bank opted to cut the RRR by 50bps, as touted overnight and in turn releasing some CNY 1.2tln in liquidity. This saw US equity futures ticking to marginal fresh session highs, whilst the breakdown sees the RTY (+0.6%) outpacing vs the ES (Unch), YM (+0.3%) and NQ (-0.6%), with the US benchmarks eyeing this week’s US CPI as Fed speakers observe the blackout period ahead of next week’s FOMC policy decision – where policymakers are expected to discuss a quickening of the pace of QE taper. From a technical standpoint, the ESz1 and NQz1 see their 50 DMAs around 4,540 and 16,626 respectively. Back to trade, Euro-indices are off best levels with a broad-based performance. UK’s FTSE 100 (+0.8%) received a boost from base metals gaining impetus on the PBoC RRR cut, with the UK index now the outperformer, whilst gains in Oil & Gas and Banks provide further tailwinds. Sectors initially started with a clear cyclical bias but have since seen a reconfiguration whereby the defensives have made their way up the ranks. The aforementioned Oil & Gas, Banks and Basic Resources are currently the winners amid upward action in crude, yields and base metals respectively. Food & Beverages and Telecoms kicked off the session at the bottom of the bunch but now reside closer to the middle of the table. The downside meanwhile sees Travel & Tech – two sectors which were at the top of the leaderboard at the cash open – with the latter seeing more noise surrounding valuations and the former initially unreactive to UK tightening measures for those travelling into the UK. In terms of individual movers, AstraZeneca (+0.7%) is reportedly studying the listing of its new vaccine division. BT (+1.2%) holds onto gains as Discovery is reportedly in discussions regarding a partnership with BT Sport and is offering to create a JV, according to sources. Taylor Wimpey (Unch) gave up opening gains seen in wake of speculation regarding Elliott Management purchasing a small stake. Top European News Johnson Says U.K. Awaiting Advice on Omicron Risks Before Review Scholz Names Harvard Medical Expert to Oversee Pandemic Policy EU Inflation Still Seen as Temporary, Eurogroup’s Donohoe Says Saudi Crown Prince Starts Gulf Tour as Rivalries Melt Away In FX, the Buck has settled down somewhat after Friday’s relatively frenetic session when price action and market moves were hectic on the back of a rather mixed BLS report and stream of Omicron headlines, with the index holding a tight line above 96.000 ahead of a blank US agenda. The Greenback is gleaning some traction from the firmer tone in yields, especially at the front end of the curve, while also outperforming safer havens and funding currencies amidst a broad upturn in risk sentiment due to perceivably less worrying pandemic assessments of late and underpinned by the PBoC cutting 50 bp off its RRR, as widely touted and flagged by Chinese Premier Li, with effect from December 15 - see 9.00GMT post on the Headline Feed for details, analysis and the initial reaction. Back to the Dollar and index, high betas and cyclicals within the basket are doing better as the latter meanders between 96.137-379 and well inside its wide 95.944-96.451 pre-weekend extremes. AUD/GBP/CAD/NZD - A technical correction and better news on the home front regarding COVID-19 after Queensland announced an earlier date to ease border restrictions, combined to give the Aussie a lift, but Aud/Usd is tightening its grip on the 0.7000 handle with the aid of the PBoC’s timely and targeted easing in the run up to the RBA policy meeting tomorrow. Similarly, the Pound appears to have gleaned encouragement from retaining 1.3200+ status and fending off offers into 0.8550 vs the Euro rather than deriving impetus via a rise in the UK construction PMI, while the Loonie is retesting resistance around 1.2800 against the backdrop of recovering crude prices and eyeing the BoC on Wednesday to see if guidance turns more hawkish following a stellar Canadian LFS. Back down under, the Kiwi is straddling 0.6750 and 1.0400 against its Antipodean peer in wake of a pick up in ANZ’s commodity price index. CHF/JPY/EUR - Still no sign of SNB action, but the Franc has fallen anyway back below 0.9200 vs the Buck and under 1.0400 against the Euro, while the Yen is under 113.00 again and approaching 128.00 respectively, as the single currency continues to show resilience either side of 1.1300 vs its US counterpart and a Fib retracement level at 1.1290 irrespective of more poor data from Germany and a deterioration in the Eurozone Sentix index, but increases in the construction PMIs. SCANDI/EM - The aforementioned revival in risk appetite, albeit fading, rather than Riksbank minutes highlighting diverse opinion, is boosting the Sek, and the Nok is also drawing some comfort from Brent arresting its decline ahead of Usd 70/brl, but the Cnh and Cny have been capped just over 6.3700 by the PBoC’s RRR reduction and ongoing default risk in China’s property sector. Elsewhere, the Try remains under pressure irrespective of Turkey’s Foreign Minister noting that domestic exports are rising and the economy is growing significantly, via Al Jazeera or claiming that the Lira is exposed to high inflation to a degree, but this is a temporary problem, while the Rub is treading cautiously before Russian President Putin and US President Biden make a video call on Tuesday at 15.00GMT. In commodities, WTI and Brent front month futures are firmer on the day with the complex underpinned by Saudi Aramco upping its official selling prices (OSPs) to Asian and US customers, coupled with the lack of progress on the Iranian nuclear front. To elaborate on the former; Saudi Arabia set January Arab light crude oil OSP to Asia at Oman/Dubai average +USD 3.30/bbl which is an increase from this month’s premium of USD 2.70/bbl, while it set light crude OSP to North-West Europe at ICE Brent USD -1.30/bbl vs. this month’s discount of USD 0.30/bbl and set light crude OSP to the US at ASCI +USD 2.15/bbl vs this month’s premium of USD 1.75/bbl. Iranian nuclear talks meanwhile are reportedly set to resume over the coming weekend following deliberations, although the likelihood of a swift deal at this point in time seems minuscule. A modest and fleeting boost was offered to the complex by the PBoC cutting RRR in a bid to spur the economy. WTI Jan resides on either side of USD 68/bbl (vs low USD 66.72/bbl) whilst Brent Feb trades around USD 71.50/bbl (vs low 70.24/bbl). Over to metals, spot gold trades sideways with the cluster of DMAs capping gains – the 50, 200 and 100 DMAs for spot reside at USD 1,792/oz, USD 1,791.50/oz and USD 1,790/oz respectively. Base metals also saw a mild boost from the PBoC announcement – LME copper tested USD 9,500/t to the upside before waning off best levels. US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap We’re really at a fascinating crossroads in markets at the moment. The market sentiment on the virus and the policymakers at the Fed are moving in opposite directions. The greatest impact of this last week was a dramatic 21.1bps flattening of the US 2s10s curve, split almost evenly between 2yr yields rising and 10yrs yields falling. As it stands, the Fed are increasingly likely to accelerate their taper next week with a market that is worried that it’s a policy error. I don’t think it is as I think the Fed is way behind the curve. However I appreciate that until we have more certainly on Omicron then it’s going to be tough to disprove the policy error thesis. The data so far on Omicron can be fitted to either a pessimistic or optimistic view. On the former, it seems to be capable of spreading fast and reinfecting numerous people who have already had covid. Younger people are also seeing a higher proportion of admissions which could be worrying around the world given lower vaccinations levels in this cohort. On the other hand, there is some evidence in South Africa that ICU usage is lower relative to previous waves at the same stage and that those in hospital are largely unvaccinated and again with some evidence that they are requiring less oxygen than in previous waves. It really does feel like Omicron could still go both ways. It seems that it could be both more transmittable but also less severe. How that impacts the world depends on the degree of both. It could be bad news but it could also actually accelerate the end of the pandemic which would be very good news. Lots of people more qualified than me to opine on this aren’t sure yet so we will have to wait for more news and data. I lean on the optimistic side here but that’s an armchair epidemiologist’s view. Anthony Fauci (chief medical advisor to Mr Biden) said to CNN last night that, “We really gotta be careful before we make any determinations that it is less severe or really doesn’t clause any severe illness comparable to Delta, but this far the signals are a bit encouraging….. It does not look like there’s a great degree of severity to it.” Anyway, the new variant has taken a hold of the back end of the curve these past 10 days. Meanwhile the front end is taking its guidance from inflation and the Fed. On cue, could this Friday see the first 7% US CPI print since 1982? With DB’s forecasts at 6.9% for the headline (+5.1% for core) we could get close to breaking such a landmark level. With the Fed on their media blackout period now, this is and Omicron are the last hurdles to cross before the FOMC conclusion on the 15th December where DB expect them to accelerate the taper and head for a March end. While higher energy prices are going to be a big issue this month, the recent falls in the price of oil may provide some hope on the inflation side for later in 2022. However primary rents and owners’ equivalent rents (OER), which is 40% of core CPI, is starting to turn and our models have long suggested a move above 4.5% in H1 2022. In fact if we shift-F9 the model for the most recent points we’re looking like heading towards a contribution of 5.5% now given the signals from the lead indicators. So even as YoY energy prices ease and maybe covid supply issues slowly fade, we still think inflation will stay elevated for some time. As such it was a long overdue move to retire the word transitory last week from the Fed’s lexicon. Another of our favourite measures to show that the Fed is way behind the curve at the moment is the quits rate that will be contained within Wednesday’s October JOLTS report. We think the labour market is very strong in the US at the moment with the monthly employment report lagging that strength. Having said that the latest report on Friday was reasonably strong behind the headline payroll disappointment. We’ll review that later. The rest of the week ahead is published in the day by day calendar at the end but the other key events are the RBA (Tuesday) and BoC (Wednesday) after the big market disruptions post their previous meetings, Chinese CPI and PPI (Thursday), final German CPI (Friday) and the US UoM consumer confidence (Friday). Also look out for Congressional newsflow on how the year-end debt ceiling issue will get resolved and also on any progress in the Senate on the “build back better” bill which they want to get through before year-end. Mr Manchin remains the main powerbroker. In terms of Asia as we start the week, stocks are trading mixed with the CSI (+0.62%), Shanghai Composite (+0.37%) and KOSPI (+0.11%) trading higher while the Nikkei (-0.50%) and Hang Seng (-0.91%) are lower. Chinese stock indices are climbing after optimism over a RRR rate cut after Premier Li Kequiang's comments last week that it could be cut in a timely manner to support the economy. In Japan SoftBank shares fell -9% and for a sixth straight day amid the Didi delisting and after the US FTC moved to block a key sale of a company in its portfolio. Elsewhere futures are pointing a positive opening in US and Europe with S&P 500 (+0.46%) and DAX (+1.00%) futures both trading well in the green. 10yr US Treasury yields are back up c.+4.2bps with 2yrs +2.6bps. Oil is also up c.2.2% Over the weekend Bitcoin fell around 20% from Friday night into Saturday. It’s rallied back a reasonable amount since (from $42,296 at the lows) and now stands at $48,981, all after being nearly $68,000 a month ago. Turning back to last week now, and the virus and hawkish Fed communications were the major themes. Despite so many unknowns (or perhaps because of it) markets were very responsive to each incremental Omicron headline last week, which drove equity volatility to around the highest levels of the year. The VIX closed the week at 30.7, shy of the year-to-date high of 37.21 reached in January and closed above 25 for 5 of the last 6 days. The S&P 500 declined -1.22% over the week (-0.84% Friday). The Stoxx 600 fell a more modest -0.28% last week, -0.57% on Friday. To be honest both felt like they fell more but we had some powerful rallies in between. The Nasdaq had a poorer week though, falling -c.2.6%, after a -1.9% decline on Friday. The other main theme was the pivot in Fed communications toward tighter policy. Testifying to Congress, Fed Chair Powell made a forceful case for accelerating the central bank’s asset purchase taper program, citing persistent elevated inflation and an improving labour market, amid otherwise strong demand in the economy, clearing the way for rate hikes thereafter. Investors priced in higher probability of earlier rate hikes, but still have the first full Fed hike in July 2022. 2yr treasury yields were sharply higher (+9.1bps on week, -2.3bps Friday) while 10yr yields declined (-12.0bps on week, -9.1bps Friday) on the prospect of a hard landing incurred from quick Fed tightening as well as the gloomy Covid outlook. The yield curve flattened -21.1bps (-6.8bps Friday) to 75.6bps, the flattest it has been since December 2020, or three stimulus bills ago if you like (four if you think build back better is priced in). German and UK debt replicated the flattening, with 2yr yields increasing +1.3bps (-0.7bps Friday) in Germany, and +0.3bps (-6.7bps) in UK this week, with respective 10yr yields declining -5.3bps (-1.9bps Friday) and -7.8bps (-6.4bps Friday). On the bright side, Congress passed a stopgap measure to keep the government funded through February, buying lawmakers time to agree to appropriations for the full fiscal year, avoiding a disruptive shutdown. Positive momentum out of DC prompted investors to increase the odds the debt ceiling will be resolved without issue, as well, with yields on Treasury bills maturing in December declining a few basis points following the news. US data Friday was strong. Despite the headline payroll increase missing the mark (+210k v expectations of +550k), the underlying data painted a healthy labour market picture, with the unemployment rate decreasing to 4.2%, and participation increasing to 61.8%. Meanwhile, the ISM services index set another record high. Oil prices initially fell after OPEC unexpectedly announced they would proceed with planned production increases at their January meeting. They rose agin though before succumbing to the Omicron risk off. Futures prices ended the week down again, with Brent futures -3.67% lower (+0.55% Friday) and WTI futures -2.57% on the week (-0.15% Friday). Tyler Durden Mon, 12/06/2021 - 07:51.....»»

Category: smallbizSource: nytDec 6th, 2021

I stayed in an Airstream converted for "glamping" at a luxury campground near Yosemite, and it was better than any hotel I"ve stayed in

My 31-foot Airstream trailer hotel suite was the perfect mix between RV travel and camping, two booming COVID-19 travel trends. Outside the Airstream.Brittany Chang/Insider RVing and camping have become two big travel trends during the COVID-19 pandemic. AutoCamp — a luxury campground with converted Airstreams as suites — is the perfect mix of both. I stayed at the AutoCamp Yosemite site in August and saw why the campground chain has boomed in popularity. See more stories on Insider's business page. It seems as if almost everyone I follow on social media decided to go camping or road-tripping during our COVID-plagued summer.AutoCamp Yosemite's Airstream suites.Brittany Chang/InsiderI was feeling a bit left out, so I decided to multitask and do both at the same time.The living room inside the Airstream.Brittany ChangAt the height of the summer travel boom in August, I visited AutoCamp, a luxury campground chain, at its location near Yosemite National Park in California.AutoCamp Yosemite's Airstream suites.Brittany Chang/InsiderBut unlike most "glamping" sites that offer the conventional canvas tents or cute cabins, I stayed inside one of AutoCamp's Airstream trailers that had been converted into a hotel room.The kitchen, living room, and bathroom inside the Airstream.Brittany ChangThe experience was so enjoyable that I've recommended the chain's plush glamping quarters to all of my friends, including the avid campers who prefer slumbers in sleeping bags over mattresses.The bedroom looking out into the kitchen.Brittany ChangThink of AutoCamp as the halfway point between RVing and camping.AutoCamp Yosemite's Airstream suites.Brittany Chang/InsiderAutoCamp specializes in the accommodation I stayed in: Airstream trailers that have been converted into hotel suites with a bedroom, kitchenette, living room, and bathroom.Outside the Airstream.Brittany ChangThe company used to convert old trailers. Now it uses custom trailers directly from Airstream, which also doubles as an AutoCamp investor, Tim McKeough reported for The New York Times.AutoCamp Yosemite's Airstream suites.Brittany Chang/InsiderSource: The New York TimesBut if you're more interested in traditional glamping accommodations, the chain also has other options like tents and cabins.AutoCamp Yosemite's tents.Brittany Chang/InsiderAutoCamp has two locations in California — Yosemite National Park and the Russian River — and one on Cape Cod, Massachusetts.AutoCamp Yosemite's cabins.Brittany Chang/InsiderIt has already announced plans to open three more locations: in the Catskill Mountains in New York and Zion National Park in Utah and Joshua Tree National Park in California.AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderDespite this planned expansion, the COVID-19 era has proved to be difficult for the AutoCamp business.A seating area by one of the cabins.Brittany Chang/InsiderLast year, the Yosemite location had to close three times: twice because of COVID-19 and once because of an encroaching forest fire, Jason Brannan, a general manager at AutoCamp, told Insider.AutoCamp Yosemite's Airstream suites.Brittany Chang/InsiderBut as RV sales and camping both continued to boom throughout the pandemic, so did the public's interest in AutoCamp.AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderThis year, the Yosemite site was closed in January and didn't reopen until February 1.AutoCamp Yosemite's general store.Brittany Chang/InsiderBut by the end of the first quarter, AutoCamp had been "doing well enough as if it had been open the whole year, bouncing back even better than budgeted for," Brannan said.AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderDuring the months the Yosemite location has been able to stay open, the company has "exceeded expectations" despite challenges with staffing and lack of corporate group bookings, Brannan said.The bathroom inside the Airstream.Brittany Chang"Now we're trying to keep up with how many guests there are," Brannan said. "We don't have enough suites to keep up with the pace of the reservations at some point."AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderThe Airstream trailer is AutoCamp's most iconic accommodation, but its cabins and tents are also often booked up.Outside the Airstreams.Brittany Chang"People book AutoCamp because they want to come to AutoCamp, not because they need a place to stay," he said.Cooking outside the Airstream.Brittany ChangNow let's take a tour around the Yosemite site and my Airstream suite to see how the chain has appealed to hordes of visitors.AutoCamp Yosemite's general store.Brittany Chang/InsiderUpon arrival, visitors can park their car and pick up their room key and a wagon. The latter replaces the need for a bellhop.A wagon with my overnight bags.Brittany ChangI stayed in Airstream suite 49, just up a short hill that was only moderately inconvenient for my little wagon.Outside the Airstream.Brittany ChangThe outdoor space of my Airstream suite had a dining set, lounge chairs, and a grill-lined fire pit, perfect for sunset dinners and quiet morning breakfasts.Outside the Airstream.Brittany ChangHeading inside, the trailer includes more than enough amenities for a stay in the woods.The entryway to the Airstream.Brittany ChangI was immediately taken aback by the number of windows, which provided plenty of natural sunlight during the day.The bedroom inside the Airstream.Brittany ChangThe natural light helped make the 31-foot trailer seem spacious and bright, more than any hotel I've ever stayed in.The bedroom inside the Airstream.Brittany ChangNow let's take a look around the amenities.The kitchen inside the Airstream.Brittany ChangThe air conditioning kept my trailer cool throughout the beating afternoon sun despite the lack of overhead tree coverage.The living room inside the Airstream.Brittany ChangMoving on, the suite's bathroom sits just past a sliding door and came with the typical vanity, toilet, and glass-panel-lined shower.The bathroom inside the Airstream.Brittany ChangAll of the Ursa Major bathroom products are stored in matching amber bottles, a visually satisfying and clean touch.The bathroom inside the Airstream.Brittany ChangAnd unlike most hotel bathrooms I've been in, the one inside my trailer suite was lined with windows.The bathroom inside the Airstream.Brittany ChangThis, combined with the clean black, gray, and white color scheme, made the bathroom feel modern and luxurious.The bathroom inside the Airstream.Brittany ChangThe living "room" is just outside the bathroom. The space is simple and comes with a couch (which also folds out into a bed), blankets, pillows, and two side tables.The living room inside the Airstream.Brittany ChangNothing too glamorous, but it was more than I was expecting from a trailer hotel room.The living room inside the Airstream.Brittany ChangThis living room space flows directly into the kitchenette.The kitchen inside the Airstream.Brittany ChangI was pleasantly surprised by the size of the kitchen space, which proved large enough for me to prepare a full meal without running out of counter space.The kitchen inside the Airstream.Brittany ChangThe trailers all come with the basic necessities to prepare a meal over a campfire. This includes a cutting board, cast-iron skillet, and knife.Cooking outside the Airstream.Brittany ChangAll I had to do was bring some of my own fresh produce and tortillas to create a plate of perfectly mediocre breakfast tacos.My mediocre breakfast taco.Brittany ChangThe trailers also come with dishes, utensils, and glassware, so I didn't have to bring any single-use cups or plates, saving both money and waste.Cooking outside the Airstream.Brittany ChangThe dishware and glasses are stored in the same cabinet as the microwave and mini refrigerator.The kitchen inside the Airstream.Brittany ChangOne of the cabinets over the kitchenette holds a full coffee station with a water kettle, French press, and ground coffee beans.The kitchen inside the Airstream.Brittany ChangNow onto the bedroom, which is just past the kitchen. It's simple but, like the living room, it gets the job done.The bedroom inside the Airstream.Brittany ChangThe space has a queen bed, nightstands with charging ports, and plenty of lights to brighten up the curtain-lined space.The bedroom inside the Airstream.Brittany ChangThere's even a television for a movie night in the woods.The bedroom looking out into the kitchen.Brittany ChangA night's stay at the AutoCamp Yosemite property includes access to any on-site amenities, such as the swimming pool …AutoCamp Yosemite's pool and clubhouse.Brittany Chang/Insider… a shaded outdoor lounge area ...AutoCamp Yosemite's shaded outdoor seating area.Brittany Chang/Insider… a small pond …AutoCamp Yosemite's small pond.Brittany Chang/Insider… a large hammock between other Airstream suites (although the hammock was generally overrun with children during my visit) ...AutoCamp Yosemite's hammock.Brittany Chang/Insider… and an air-conditioned clubhouse with communal seating and tables, a fire pit, and the general store.AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderThe general store is fully stocked with basic ingredients, premade meals, beverages, and other glamping necessities.AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderThe clubhouse also has a small cafe that sells coffee, meals, beer, and wine for happy hours in the woods.AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderThe property even has a few electric-vehicle charging stations.AutoCamp Yosemite's electric-vehicle charging stations.Brittany Chang/InsiderI stayed at the AutoCamp Yosemite for only one night, but I enjoyed my solo glamping experience more than any hotel room I've ever stayed in.Outside the Airstream.Brittany ChangThe Airstream trailer is a comfortable living experience, and it felt as if I was staying in my own downsized apartment ...The bathroom inside the Airstream.Brittany Chang… with the added benefit of having my own outdoor fire pit, which is the best part about camping.Cooking outside the Airstream.Brittany ChangStaying in a trailer also felt private and quiet: The only time I ran into other people was when I was in the clubhouse.Outside the Airstream.Brittany ChangBut I can't compare my fond memories of camping and sleeping on dirt to my stay at AutoCamp Yosemite.AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderIn terms of amenities, AutoCamp felt more like staying at a hotel than any sort of camping I've done.AutoCamp Yosemite's map and my room keys.Brittany Chang/InsiderInstead of flimsy tents, I stayed in a fully enclosed and air-conditioned tiny home.Outside the Airstream.Brittany ChangAnd instead of a cooler full of melting ice, I had a mini refrigerator.AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderI opted to cook over the fire, but I could have purchased a microwaveable meal instead.Cooking outside the Airstream.Brittany ChangBut cooking outside my trailer was more convenient than cooking at a traditional camping site.Outside the Airstream.Brittany ChangInstead of tediously starting and tending to a fire, I was able to purchase firewood at the general store. All I had to do was light it using some complimentary matches, and I was ready to make my meals.The kitchen inside the Airstream.Brittany ChangAnd having a good-sized kitchen countertop made preparing my mise en place easy and bug-free.The kitchen, living room, and bathroom inside the Airstream.Brittany ChangBut be prepared to pay more for a stay at AutoCamp Yosemite than you might ever need to for a campground reservation or hotel.AutoCamp Yosemite's lake.Brittany Chang/InsiderThe Yosemite site ranges from $175 to $475 per night depending on the season and day.The view from my entry.Brittany ChangSource: AutoCampYes, it might seem ridiculous to pay almost $500 to sleep in a trailer.The bedroom inside the Airstream.Brittany ChangBut AutoCamp combines the experience of being outdoors with the convenience and comfort of being in a hotel. Plus it's as private and quiet as your typical campground.Outside the Airstream.Brittany ChangI didn't have to worry about setting up a tent or bringing cookware and camping gear. It's like paying for the luxury and convenience of an all-inclusive glamping experience.The air conditioning unit.Brittany ChangIn my opinion, it's a great way for city people to get outdoors while still enjoying the benefits of modern luxury like Wi-Fi and mattresses.The kitchen inside the Airstream.Brittany ChangDo I still prefer camping over glamping? Yes.AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderBut will I treat myself to another AutoCamp stay in the future, maybe at a different location? Well, when I have the money to do so, also yes.AutoCamp Yosemite's clubhouse.Brittany Chang/InsiderRead the original article on Business Insider.....»»

Category: dealsSource: nytNov 23rd, 2021

A New Generation of Nuclear Reactors Could Hold the Key to a Green Future

On a conference-room whiteboard in the heart of Silicon Valley, Jacob DeWitte sketches his startup’s first product. In red marker, it looks like a beer can in a Koozie, stuck with a crazy straw. In real life, it will be about the size of a hot tub, and made from an array of exotic materials,… On a conference-room whiteboard in the heart of Silicon Valley, Jacob DeWitte sketches his startup’s first product. In red marker, it looks like a beer can in a Koozie, stuck with a crazy straw. In real life, it will be about the size of a hot tub, and made from an array of exotic materials, like zirconium and uranium. Under carefully controlled conditions, they will interact to produce heat, which in turn will make electricity—1.5 megawatts’ worth, enough to power a neighborhood or a factory. DeWitte’s little power plant will run for a decade without refueling and, amazingly, will emit no carbon. ”It’s a metallic thermal battery,” he says, coyly. But more often DeWitte calls it by another name: a nuclear reactor. [time-brightcove not-tgx=”true”] Fission isn’t for the faint of heart. Building a working reactor—even a very small one—requires precise and painstaking efforts of both engineering and paper pushing. Regulations are understandably exhaustive. Fuel is hard to come by—they don’t sell uranium at the Gas-N-Sip. But DeWitte plans to flip the switch on his first reactor around 2023, a mere decade after co-founding his company, Oklo. After that, they want to do for neighborhood nukes what Tesla has done for electric cars: use a niche and expensive first version as a stepping stone toward cheaper, bigger, higher-volume products. In Oklo’s case, that means starting with a “microreactor” designed for remote communities, like Alaskan villages, currently dependent on diesel fuel trucked, barged or even flown in, at an exorbitant expense. Then building more and incrementally larger reactors until their zero-carbon energy source might meaningfully contribute to the global effort to reduce fossil-fuel emissions. At global climate summits, in the corridors of Congress and at statehouses around the U.S., nuclear power has become the contentious keystone of carbon reduction plans. Everyone knows they need it. But no one is really sure they want it, given its history of accidents. Or even if they can get it in time to reach urgent climate goals, given how long it takes to build. Oklo is one of a growing handful of companies working to solve those problems by putting reactors inside safer, easier-to-build and smaller packages. None of them are quite ready to scale to market-level production, but given the investments being made into the technology right now, along with an increasing realization that we won’t be able to shift away from fossil fuels without nuclear power, it’s a good bet that at least one of them becomes a game changer. If existing plants are the energy equivalent of a 2-liter soda bottle, with giant, 1,000-megawatt-plus reactors, Oklo’s strategy is to make reactors by the can. The per-megawatt construction costs might be higher, at least at first. But producing units in a factory would give the company a chance to improve its processes and to lower costs. Oklo would pioneer a new model. Nuclear plants need no longer be bet-the-company big, even for giant utilities. Venture capitalists can get behind the potential to scale to a global market. And climate hawks should fawn over a zero-carbon energy option that complements burgeoning supplies of wind and solar power. Unlike today’s plants, which run most efficiently at full blast, making it challenging for them to adapt to a grid increasingly powered by variable sources (not every day is sunny, or windy), the next generation of nuclear technology wants to be more flexible, able to respond quickly to ups and downs in supply and demand. Engineering these innovations is hard. Oklo’s 30 employees are busy untangling the knots of safety and complexity that sent the cost of building nuclear plants to the stratosphere and all but halted their construction in the U.S. ”If this technology was brand-‘new’—like if fission was a recent breakthrough out of a lab, 10 or 15 years ago—we’d be talking about building our 30th reactor,” DeWitte says. But fission is an old, and fraught, technology, and utility companies are scrambling now to keep their existing gargantuan nuclear plants open. Economically, they struggle to compete with cheap natural gas, along with wind and solar, often subsidized by governments. Yet climate-focused nations like France and the U.K. that had planned to phase out nuclear are instead doubling down. (In October, French President Emmanuel Macron backed off plans to close 14 reactors, and in November, he announced the country would instead start building new ones.) At the U.N. climate summit in Glasgow, the U.S. announced its support for Poland, Kenya, Ukraine, Brazil, Romania and Indonesia to develop their own new nuclear plants—while European negotiators assured that nuclear energy counts as “green.” All the while, Democrats and Republicans are (to everyone’s surprise) often aligned on nuclear’s benefits—and, in many cases, putting their powers of the purse behind it, both to keep old plants open in the U.S. and speed up new technologies domestically and overseas. It makes for a decidedly odd moment in the life of a technology that already altered the course of one century, and now wants to make a difference in another. There are 93 operating nuclear reactors in the U.S.; combined, they supply 20% of U.S. electricity, and 50% of its carbon-free electricity. Nuclear should be a climate solution, satisfying both technical and economic needs. But while the existing plants finally operate with enviable efficiency (after 40 years of working out the kinks), the next generation of designs is still a decade away from being more than a niche player in our energy supply. Everyone wants a steady supply of electricity, without relying on coal. Nuclear is paradoxically right at hand, and out of reach. For that to change, “new nuclear” has to emerge before the old nuclear plants recede. It has to keep pace with technological improvements in other realms, like long-term energy storage, where each incremental improvement increases the potential for renewables to supply more of our electricity. It has to be cheaper than carbon-capture technologies, which would allow flexible gas plants to operate without climate impacts (but are still too expensive to build at scale). And finally it has to arrive before we give up—before the spectre of climate catastrophe creates a collective “doomerism,” and we stop trying to change. Not everyone thinks nuclear can reinvent itself in time. “When it comes to averting the imminent effects of climate change, even the cutting edge of nuclear technology will prove to be too little, too late,” predicts Allison Macfarlane, former chair of the U.S. Nuclear Regulatory Commission (NRC)—the government agency singularly responsible for permitting new plants. Can a stable, safe, known source of energy rise to the occasion, or will nuclear be cast aside as too expensive, too risky and too late? J R Eyerman—The LIFE Picture Collection/ShutterstockLaboratory personnel developing a fusion device in Project Sherwood at the Los Alamos National Laboratory, 1958 Trying Again Nuclear began in a rush. In 1942, in the lowest mire of World War II, the U.S. began the Manhattan Project, the vast effort to develop atomic weapons. It employed 130,000 people at secret sites across the country, the most famous of which was Los Alamos Laboratory, near Albuquerque, N.M., where Robert Oppenheimer led the design and construction of the first atomic bombs. DeWitte, 36, grew up nearby. Even as a child of the ’90s, he was steeped in the state’s nuclear history, and preoccupied with the terrifying success of its engineering and the power of its materials. “It’s so incredibly energy dense,” says DeWitte. “A golf ball of uranium would power your entire life!” DeWitte has taken that bromide almost literally. He co-founded Oklo in 2013 with Caroline Cochran, while both were graduate students in nuclear engineering at the Massachusetts Institute of Technology. When they arrived in Cambridge, Mass., in 2007 and 2008, the nuclear industry was on a precipice. Then presidential candidate Barack Obama espoused a new eagerness to address climate change by reducing carbon emissions—which at the time meant less coal, and more nuclear. (Wind and solar energy were still a blip.) It was an easy sell. In competitive power markets, nuclear plants were profitable. The 104 operating reactors in the U.S. at the time were running smoothly. There hadn’t been a major accident since Chernobyl, in 1986. The industry excitedly prepared for a “nuclear renaissance.” At the peak of interest, the NRC had applications for 30 new reactors in the U.S. Only two would be built. The cheap natural gas of the fracking boom began to drive down electricity prices, razing nuclear’s profits. Newly subsidized renewables, like wind and solar, added even more electricity generation, further saturating the markets. When on March 11, 2011, an earthquake and subsequent tsunami rolled over Japan’s Fukushima Daiichi nuclear power plant, leading to the meltdown of all three of its reactors and the evacuation of 154,000 people, the industry’s coffin was fully nailed. Not only would there be no renaissance in the U.S, but the existing plants had to justify their safety. Japan shut down 46 of its 50 operating reactors. Germany closed 11 of its 17. The U.S. fleet held on politically, but struggled to compete economically. Since Fukushima, 12 U.S. reactors have begun decommissioning, with three more planned. At MIT, Cochran and DeWitte—who were teaching assistants together for a nuclear reactor class in 2009, and married in 2011—were frustrated by the setback. ”It was like, There’re all these cool technologies out there. Let’s do something with it,” says Cochran. But the nuclear industry has never been an easy place for innovators. In the U.S., its operational ranks have long been dominated by “ring knockers”—the officer corps of the Navy’s nuclear fleet, properly trained in the way things are done, but less interested in doing them differently. Governments had always kept a tight grip on nuclear; for decades, the technology was under shrouds. The personal computing revolution, and then the wild rise of the Internet, further drained engineering talent. From DeWitte and Cochran’s perspective, the nuclear-energy industry had already ossified by the time Fukushima and fracking totally brought things to a halt. “You eventually got to the point where it’s like, we have to try something different,” DeWitte says. He and Cochran began to discreetly convene their MIT classmates for brainstorming sessions. Nuclear folks tend to be dogmatic about their favorite method of splitting atoms, but they stayed agnostic. “I didn’t start thinking we had to do everything differently,” says DeWitte. Rather, they had a hunch that marginal improvements might yield major results, if they could be spread across all of the industry’s usual snags—whether regulatory approaches, business models, the engineering of the systems themselves, or the challenge of actually constructing them. In 2013, Cochran and DeWitte began to rent out the spare room in their Cambridge home on Airbnb. Their first guests were a pair of teachers from Alaska. The remote communities they taught in were dependent on diesel fuel for electricity, brought in at enormous cost. That energy scarcity created an opportunity: in such an environment, even a very expensive nuclear reactor might still be cheaper than the current system. The duo targeted a price of $100 per megawatt hour, more than double typical energy costs. They imagined using this high-cost early market as a pathway to scale their manufacturing. They realized that to make it work economically, they wouldn’t have to reinvent the reactor technology, only the production and sales processes. They decided to own their reactors and supply electricity, rather than supply the reactors themselves—operating more like today’s solar or wind developers. “It’s less about the technology being different,” says DeWitte, “than it is about approaching the entire process differently.” That maverick streak raised eyebrows among nuclear veterans—and cash from Silicon Valley venture capitalists, including a boost from Y Combinator, where companies like Airbnb and Instacart got their start. In the eight years since, Oklo has distinguished itself from the competition by thinking smaller and moving faster. There are others competing in this space: NuScale, based in Oregon, is working to commercialize a reactor similar in design to existing nuclear plants, but constructed in 60-megawatt modules. TerraPower, founded by Bill Gates in 2006, has plans for a novel technology that uses its heat for energy storage, rather than to spin a turbine, which makes it an even more flexible option for electric grids that increasingly need that pliability. And X-energy, a Maryland-based firm that has received substantial funding from the U.S. Department of Energy, is developing 80-megawatt reactors that can also be grouped into “four-packs,” bringing them closer in size to today’s plants. Yet all are still years—and a billion dollars—away from their first installations. Oklo brags that its NRC application is 20 times shorter than NuScale’s, and its proposal cost 100 times less to develop. (Oklo’s proposed reactor would produce one-fortieth the power of NuScale’s.) NRC accepted Oklo’s application for review in March 2020, and regulations guarantee that process will be complete within three years. Oklo plans to power on around 2023, at a site at the Idaho National Laboratory, one of the U.S.’s oldest nuclear-research sites, and so already approved for such efforts. Then comes the hard part: doing it again and again, booking enough orders to justify building a factory to make many more reactors, driving costs down, and hoping politicians and activists worry more about the menace of greenhouse gases than the hazards of splitting atoms. Nuclear-industry veterans remain wary. They have seen this all before. Westinghouse’s AP1000 reactor, first approved by the NRC in 2005, was touted as the flagship technology of Obama’s nuclear renaissance. It promised to be safer and simpler, using gravity rather than electricity-driven pumps to cool the reactor in case of an emergency—in theory, this would mitigate the danger of power outages, like the one that led to the Fukushima disaster. Its components could be constructed at a centralized location, and then shipped in giant pieces for assembly. But all that was easier said than done. Westinghouse and its contractors struggled to manufacture the components according to nuclear’s mega-exacting requirements and in the end, only one AP1000 project in the U.S. actually happened: the Vogtle Electric Generating Plant in Georgia. Approved in 2012, its two reactors were expected at the time to cost $14 billion and be completed in 2016 and 2017, but costs have ballooned to $25 billion. The first will open, finally, next year. Oklo and its competitors insist things are different this time, but they have yet to prove it. “Because we haven’t built one of them yet, we can promise that they’re not going to be a problem to build,” quips Gregory Jaczko, a former NRC chair who has since become the technology’s most biting critic. “So there’s no evidence of our failure.” Georg Zinsler—Anzenberger/Redu​xA guided tour in the control room of reactor No. 2 inside the Chernobyl Nuclear Power Plant The Challenge The cooling tower of the Hope Creek nuclear plant rises 50 stories above Artificial Island, New Jersey, built up on the marshy edge of the Delaware River. The three reactors here—one belonging to Hope Creek, and two run by the Salem Generating Station, which shares the site—generate an astonishing 3,465 megawatts of electricity, or roughly 40% of New Jersey’s total supply. Construction began in 1968, and was completed in 1986. Their closest human neighbors are across the river in Delaware. Otherwise the plant is surrounded by protected marshlands, pocked with radiation sensors and the occasional guard booth. Of the 1,500 people working here, around 100 are licensed reactor operators—a special designation given by the NRC, and held by fewer than 4,000 people in the country. Among the newest in their ranks is Judy Rodriguez, an Elizabeth, N.J., native and another MIT grad. “Do I have your permission to enter?” she asks the operator on duty in the control room for the Salem Two reactor, which came online in 1981 and is capable of generating 1,200 megawatts of power. The operator opens a retractable belt barrier, like at an airport, and we step across a thick red line in the carpet. A horseshoe-shaped gray cabinet holds hundreds of buttons, glowing indicators and blinking lights, but a red LED counter at the center of the wall shows the most important number in the room: 944 megawatts, the amount of power the Salem Two reactor was generating that afternoon in September. Beside it is a circular pattern of square indicator lights showing the uranium fuel assemblies inside the core, deep inside the concrete domed containment building a couple hundred yards away. Salem Two has 764 of these constructions; each is about 6 inches sq and 15 ft. tall. They contain the source of the reactor’s energy, which are among the most guarded and controlled materials on earth. To make sure no one working there forgets that fact, a phrase is painted on walls all around the plant: “Line of Sight to the Reactor.” As the epitome of critical infrastructure, this station has been buffeted by the crises the U.S. has suffered in the past few decades. After 9/11, the three reactors here absorbed nearly $100 million in security upgrades. Everyone entering the plant passes through metal- and explosives detectors, and radiation detectors on the way out. Walking between the buildings entails crossing a concrete expanse beneath high bullet resistant enclosures (BREs). The plant has a guard corp that has more members than any in New Jersey besides the state police, and federal NRC rules mean that they don’t have to abide by state limitations on automatic weapons. The scale and complexity of the operation is staggering—and expensive. ”The place you’re sitting at right now costs us about $1.5 million to $2 million a day to run,” says Ralph Izzo, president and CEO of PSEG, New Jersey’s public utility company, which owns and operates the plants. “If those plants aren’t getting that in market, that’s a rough pill to swallow.” In 2019, the New Jersey Board of Public Utilities agreed to $300 million in annual subsidies to keep the three reactors running. The justification is simple: if the state wants to meet its carbon-reduction goals, keeping the plants online is essential, given that they supply 90% of the state’s zero-carbon energy. In September, the Illinois legislature came to the same conclusion as New Jersey, approving almost $700 million over five years to keep two existing nuclear plants open. The bipartisan infrastructure bill includes $6 billion in additional support (along with nearly $10 billion for development of future reactors). Even more is expected in the broader Build Back Better bill. These subsidies—framed in both states as “carbon mitigation credits”—acknowledge the reality that nuclear plants cannot, on their own terms, compete economically with natural gas or coal. “There has always been a perception of this technology that never was matched by reality,” says Jaczko. The subsidies also show how climate change has altered the equation, but not decisively enough to guarantee nuclear’s future. Lawmakers and energy companies are coming to terms with nuclear’s new identity as clean power, deserving of the same economic incentives as solar and wind. Operators of existing plants want to be compensated for producing enormous amounts of carbon free energy, according to Josh Freed, of Third Way, a Washington, D.C., think tank that champions nuclear power as a climate solution. “There’s an inherent benefit to providing that, and it should be paid for.” For the moment, that has brought some assurance to U.S. nuclear operators of their future prospects. “A megawatt of zero-carbon electricity that’s leaving the grid is no different from a new megawatt of zero carbon electricity coming onto the grid,” says Kathleen Barrón, senior vice president of government and regulatory affairs and public policy at Exelon, the nation’s largest operator of nuclear reactors. Globally, nations are struggling with the same equation. Germany and Japan both shuttered many of their plants after the Fukushima disaster, and saw their progress at reducing carbon emissions suffer. Germany has not built new renewables fast enough to meet its electricity needs, and has made up the gap with dirty coal and natural gas imported from Russia. Japan, under international pressure to move more aggressively to meet its carbon targets, announced in October that it would work to restart its reactors. “Nuclear power is indispensable when we think about how we can ensure a stable and affordable electricity supply while addressing climate change,” said Koichi Hagiuda, Japan’s minister of economy, trade and industry, at an October news conference. China is building more new nuclear reactors than any other country, with plans for as many as 150 by the 2030s, at an estimated cost of nearly half a trillion dollars. Long before that, in this decade, China will overtake the U.S. as the operator of the world’s largest nuclear-energy system. Francesca Todde—contrasto/Redux Civaux nuclear power plant, in Civaux, France, May 2018 The future won’t be decided by choosing between nuclear or solar power. Rather, it’s a technically and economically complicated balance of adding as much renewable energy as possible while ensuring a steady supply of electricity. At the moment, that’s easy. “There is enough opportunity to build renewables before achieving penetration levels that we’re worried about the grid having stability,” says PSEG’s Izzo. New Jersey, for its part, is aiming to add 7,500 megawatts of offshore wind by 2035—or about the equivalent of six new Salem-sized reactors. The technology to do that is readily at hand—Kansas alone has about that much wind power installed already. The challenge comes when renewables make up a greater proportion of the electricity supply—or when the wind stops blowing. The need for “firm” generation becomes more crucial. “You cannot run our grid solely on the basis of renewable supply,” says Izzo. “One needs an interseasonal storage solution, and no one has come up with an economic interseasonal storage solution.” Existing nuclear’s best pitch—aside from the very fact it exists already—is its “capacity factor,” the industry term for how often a plant meets its full energy making potential. For decades, nuclear plants struggled with outages and long maintenance periods. Today, improvements in management and technology make them more likely to run continuously—or “breaker to breaker”—between planned refuelings, which usually occur every 18 months, and take about a month. At Salem and Hope Creek, PSEG hangs banners in the hallways to celebrate each new record run without a maintenance breakdown. That improvement stretches across the industry. “If you took our performance back in the mid-’70s, and then look at our performance today, it’s equivalent to having built 30 new reactors,” says Maria Korsnick, president and CEO of the Nuclear Energy Institute, the industry’s main lobbying organization. That improved reliability has become its major calling card today. Over the next 20 years, nuclear plants will need to develop new tricks. “One of the new words in our vocabulary is flexibility,” says Marilyn Kray, vice president of nuclear strategy and development at Exelon, which operates 21 reactors. “Flexibility not only in the existing plants, but in the designs of the emerging ones, to make them even more flexible and adaptable to complement renewables.” Smaller plants can adapt more easily to the grid, but they can also serve new customers, like providing energy directly to factories, steel mills or desalination plants. Bringing those small plants into operation could be worth it, but it won’t be easy.”You can’t just excuse away the thing that’s at the center of all of it, which is it’s just a hard technology to build,” says Jaczko, the former NRC chair. “It’s difficult to make these plants, it’s difficult to design them, it’s difficult to engineer them, it’s difficult to construct them. At some point, that’s got to be the obvious conclusion to this technology.” But the equally obvious conclusion is we can no longer live without it. “The reality is, you have to really squint to see how you get to net zero without nuclear,” says Third Way’s Freed. “There’s a lot of wishful thinking, a lot of fingers crossed.”.....»»

Category: topSource: timeNov 16th, 2021

World"s Most Bearish Hedge Fund Shuts Down: Here Is Russell Clark"s Farewell Letter

World's Most Bearish Hedge Fund Shuts Down: Here Is Russell Clark's Farewell Letter It was about four or five years ago that we dubbed Russell Clark (formerly of Horseman Global and more recently of Russell Clark Investment Management) the world's most bearish hedge fund, and for a good reason: roughly a decade ago, Clark decided to take his fund net short - an unheard of event in an industry where despite the name, the average net exposure is well north of 100% - and while his market bias ebbed and flowed, it remained short for much of the past ten years. What is more remarkable is that despite his extremely bearish positioning, Clark managed to eek out consistent monthly gains and with the exception of 2016 he was profitable virtually every year in the past decade... and then 2019 happened and things started falling apart when his hedge fund lost a staggering 35%. He never really recovered. This was the beginning of the end for Clark - sensing what was coming, two years ago we wrote that the "World's Most Bearish Hedge Fund" Loses 75% Of Its Assets After Worst Year On Record." Back then we wrote the following: Every trader has heard the age-old saying "don't fight the Fed". Everyone, perhaps with one exception: Horseman Global's CIO, and recently owner, Russell Clark, who has been upping his bearish bets in the face of a relentless liquidity onslaught by the Fed, ECB and PBOC, which now also includes the Fed's "NOT QE." In fact, in his ambition to on up the central banks, Clark may have overdone it, because according to his latest investor letter, the fund's equity net short position is now the highest it has been in history, at a whopping -110.87%, offset by a 60.59% net long in bonds. Alas, while we admire Clark's courage, we have less empathy for the fund's performance, which has seen better days, and after slumping 6% in October, and losing money on 4 of the past 5 months, is now on pace for its worst year on record, down 27.05% YTD, surpassing the -24.72% return posted in 2009, and reversing all the goodwill the fund created with its 7.5% return last year when most of its peers lost money alongside the S&P500. In light of the above, we have been fascinated how long Horseman can remain solvent as the Fed remains irrationally bullish and liquid, and unfortunately for Clark - who recently put his personal money where his mouth is and bought a controlling interest in Horseman where he was the main portfolio manager for years - the answer appears to be "not much longer" - as the fund reports, as of October 31, the AUM for the Horseman Global Fund was down to just $150 million... Two years later, despite the crash in early 2020 which helped boost the fund's fortune for a few months, the slow and steady death by a thousand redemption letters continued, and this morning our prediction has finally come true: the man who for the past decade valiantly fought the Fed, and all other central banks, has finally thrown in the towel. And with capital in his core RCIM Global Fund dropping to just $119 million from as much as $1.7 billion in 2015, Clark writes in what is his last letter to investors that "after a couple of years of turbulent markets and the increasing influence of politics rather than economics on the markets, I have come to the decision that the best way forward is for the Fund Directors to wind up the fund and return capital." The fund shuts down after dropping 5.3% for the month of October and down 2.6% in 2021. While Clark touches on various things in his last letter, what is most notable is the justification for his shutdown. To regular readers of Zero Hedge, nothing he says will be a surprise: the Fed has taken over the "market" which has now become a political tool to shape and mold public opinion, while the core role of markets - discounting the future and price discovery - no longer exists, to wit: This is why I am returning capital. Markets have now become a political choice. US markets are essentially a bet on the Fed unable to raise rates, and congress unable to regulate big tech or raise corporate tax rates. Commodity markets have now become a bet on Chinese policy objectives, and currencies have become a bet on what Chinese policy objectives are too. Give me an economic problem, then I can properly gauge risk. Give me a Chinese political problem – I am taking a guess as much as the next person. Did I think Alibaba was going to fall 50% this year? No, not until the Chinese government told me to think that way. Is Alibaba a good short now? I have no idea, and like everyone else will have to wait to see what the Chinese government says. So, I think it time to step back, have a think about where we are going, and then come back when I can see an opportunity for my skill set. Perhaps that’s never, but I doubt it. The only constant in life is change. As always, we admire Clark's honesty and courage to say it how it is, even if it means we may not hear from him ever again. Meanwhile, in a fitting epitaph for his fund, Bloomberg writes that "the closure marks an end to yet another bearish hedge fund manager’s fund as stocks continue to march ahead. Clark, who uses macro economic analysis to bet on stocks, is among a series of long-short equity hedge fund managers who have fallen way behind surging markets and have suffered investors exodus." The end of Clark’s fund is a contrasting echo to how his investing career began more than two decades ago. As a graduate trainee at UBS Group AG in Sydney, he followed friends getting rich by day-trading tech stocks in 2000 and spent his first few paychecks on five dot-com shares. Four crashed to zero, and the fifth lost half its value as the tech bubble burst. This time, a short wager on tech stocks was his latest contrarian bet. Clark told clients earlier this year that he was betting against technology shares as regulators from the U.S. to China crack down on the industry. Tech stocks as measured by NASDAQ Composite Index have been on a tear ever since. Clark had been net short equities for the vast majority of the last nine years. He has faced a difficult period of performance and capital raising, and his firm -- previously named Horseman Capital Management -- shuttered two funds. Born and raised in Canberra, Australia, Clark bought the controlling interest in Horseman in 2019. He had joined Horseman in 2006 and started running the firm’s flagship fund in 2010 when John Horseman, a highly successful global stock fund manager in the 1990s, retired. Clark, who runs his investment firm from his office inside a small house in a quiet mews near Buckingham Palace Gardens in London, had said in 2019 that he was convinced that a stock market crash was near. Or, he told Bloomberg in rare public remarks, “this could be my farewell interview.” Ironically, he was right: the March 2020 crash - the biggest market crisis since the Great Depression - indeed happened just a few months later but in turn it produced the biggest and most coordinated market bailout by central banks and "helicopter money" in history. And that, for the world's most bearish hedge fund, was the final straw. Clark's final message to investors is below: The fund lost 5.30% this month, mainly from the short book. After a couple of years of turbulent markets and the increasing influence of politics rather than economics on the markets, I have come to the decision that the best way forward is for the Fund Directors to wind up the fund and return capital. The success I enjoyed from 2011 through to beginning of 2016 largely stemmed from asking the question that no one seemed to ask – why does the Yen and Japanese Government Bonds rally whenever there is a crisis? The obvious answer was capital flows from Japan would create a bull market in the area they flowed to, and then when the Japanese pulled capital back, it would create a bear market, often with significant currency volatility. Armed with that observation, and combined with analysis of the commodity markets, we build a portfolio that was largely short emerging market and long bonds. Since 2016, using the same analysis as above, Japanese capital flows have almost exclusively been to the US, and are an order of magnitude larger than anything seen before. And yet, US equities still power ahead, Yen remains weak, and currency volatility has been consigned to the history books. Of course, I asked myself why this is. Why did a model that worked so well, for the best part of 25 years, stop working? The obvious answer is that central banks led Quantitative Easing (QE). But that answer alone seems insufficient to me. Japan has had low interest rates for years and was still racked by bouts of extreme equity and currency volatility. The other problem with that answer is that the big inflation spike seen this year should then lead to greater volatility in equities, especially as central banks dial back QE programs. The answer for me comes from China. China wants a strong currency, and to keep consumption strong. It seems to me that the Chinese government uses it extraordinary control of the economy to control activity and the currency through the commodity markets. To elaborate, I expected China to post a weak trade surplus in October, and for currency devaluation fears to spike (particularly after the recent Evergrande selloff). Chinese trade surplus was actually very strong. And it was strong because Chinese imports of oil and iron ore were down significantly. Chinese steel production was down a stunning 20% year on year, a number you would typically only see in a bad recession. China has effectively taken control of key commodities, and now adjusts volumes to suit its own needs. Taking all this volatility through physical markets, has essentially collapsed financial market volatility, and also led to commodity currencies being significantly weaker than commodity prices – which has been a problem for me this year. Now I understand this, non-obvious trades at the beginning of the year such as long oil, short iron ore now seem obvious. The surprising weakness of gold and other precious metals can make sense in this analysis. It also explains why the extraordinary fiscal and monetary policies of the US have not been met with greater commodity or bond turbulence. It is very hard for me to get bearish US treasuries when I see Chinese steel production down 20% year on year. The big question then is whether this Chinese policy of absorbing financial risk in the physical economy sustainable? History suggests not, as most countries prefer to devalue than slow economic growth. However, I can see reasons why China may continue with this policy. The most powerful is that with US policymakers seemingly unable to raise interest rates, or balance budgets there is a gap in the market for a credible currency. Is China making a play for reserve currency status? And this is why I am returning capital. Markets have now become a political choice. US markets are essentially a bet on the Fed unable to raise rates, and congress unable to regulate big tech or raise corporate tax rates. Commodity markets have now become a bet on Chinese policy objectives, and currencies have become a bet on what Chinese policy objectives are too. Give me an economic problem, then I can properly gauge risk. Give me a Chinese political problem – I am taking a guess as much as the next person. Did I think Alibaba was going to fall 50% this year? No, not until the Chinese government told me to think that way. Is Alibaba a good short now? I have no idea, and like everyone else will have to wait to see what the Chinese government says. So, I think it time to step back, have a think about where we are going, and then come back when I can see an opportunity for my skill set. Perhaps that’s never, but I doubt it. The only constant in life is change. This will be my final newsletter and it just leaves me to thank you for your support and wish you all the success in the future. From a personal perspective I plan to keep producing research, so keep an eye out for my future notes. Russell. As usual, the full letter is available to professional subs in the usual place. Tyler Durden Thu, 11/11/2021 - 10:34.....»»

Category: blogSource: zerohedgeNov 11th, 2021

Jaguar I-PACE outsells all teslas combined in The Netherlands, Inside EVs says

See the rest of the story here. provides the latest financial news as it breaks. Known as a leader in market intelligence, The Fl.....»»

Category: blogSource: theflyonthewallJan 3rd, 2019

Powell Is The New Arthur Burns, Not The New Paul Volcker

Powell Is The New Arthur Burns, Not The New Paul Volcker Authored by Ryan McMaken via The Mises Institute, Last year, just as it was becoming increasingly clear that price inflation was mounting, Jerome Powell repeatedly denied there was any reason for concern. He called inflation "transitory." A few months later, he admitted it was not transitory, but denied it was "entrenched." Then, by late 2021, he admitted price inflation was getting out of control but still took no action of any consequence. Through it all, the Powell plan was repeated delay and opposition to any lessening of the Fed's established policy of ramming down interest rates again and again.  By spring 2022, however, it became impossible to pretend the previous six months of rising inflation rates never happened. In order to avoid looking utterly clueless, Powell was forced to endorse a 25 basis point increase to the target rate in March. But that amounted only to a 0.50 percent target rate. Then there was a 50 basis point increase in May, so the target rate rose to a meager 1 percent. After June's meeting, the target rate sat at 1.75 percent— a small fraction of the target rates we saw even during the years of monetary inflation and housing bubbles under Alan Greenspan.  The other side of this ultraeasy monetary policy is quantitative easing via the Fed's asset purchases of mortgage-based securities and government debt. These purchases were made with newly created money. Although Powell talked a big game about scaling back quantitative easing and reducing asset purchases, actual action was virtually nonexistent, and the Fed continued to print money for more asset purchases into March 2022. Since Powell finally announced the end of QE, the Fed's assets have decreased by a paltry 0.3 percent.  In other words, Powell's Fed is a Fed that does no more than is absolutely necessary to convince the public and policy makers that it is "doing something" about inflation. This is all short-term political posturing, and reflects that fact Powell—like Janet Yellen before him—is a politically minded technocrat who thinks in terms of using the central bank to protect the regime. The regime needs to look like it is "managing" the economy. But the regime also needs low interest rates to keep down interest payments on its massive $30 trillion debt. Powell is apparently more than happy to oblige on all fronts.  When it comes to actually doing something to address the core causes of price inflation, however, Powell seems uninterested. The plan right now is apparently to trust in hope that inflation can be "fixed" with some very minor tinkering with the federal funds rate and the Fed's portfolio. And then everything will be fine.  This mirrors the thinking of Arthur Burns and his Fed during the 1970s. While inflation mounted in the late 1960s and early 1970s, Burns—who became chairman in 1970—chose to avoid doing anything that might upset the inflation-fueled economy that had prevailed during the previous decade. The result was 12 percent inflation by the mid 1970s and an inflationary period that only came to an end after Chairman Paul Volcker finally had to take the anti-inflationary measures that Burns was unwilling to take.  With his current timid, weak, and prevaricating position on price inflation, Powell is positioning himself as the new Arthur Burns. He's only interested in doing just enough to get inflation rates down far enough to deflect political pressure from taxpayers, consumers, and others who suffer most from price inflation. It's nothing more than kicking the can down the road. That is Burns's legacy, and Powell is embracing it. Arthur Burns and the 1970s Fueled in part by big spending on the Vietnam War and on Lyndon Johnson's new welfare programs, Consumer Price Index inflation rose from 2 percent in the mid-1960s to 6.4 percent by February 1970. At that point, inflation was at the highest rate it had been since the Korean War. Burns, however, was not exactly one for bold action. Outgoing Fed chairman William McChesney Martin had already attempted to rein in inflation with a rising discount rate in 1968 and 1969. (The discount rate was the key policy rate at the time.) As a result, the discount rate hit 6 percent and a recession ensued. Burns was only too happy to bring rates back down as the 1969–70 recession subsided. Thanks to the short recession—and to the usual disinflationary factors such as growth in worker productivity—price inflation temporarily and moderately declined for the next two years. But by 1973, price inflation was surging again, and inflation hit 12 percent in November 1974. At the worst of it, the Fed raised the discount rate from 5 percent in 1973 to 8 percent in 1974. That looked like it "did the trick" because price inflation then fell back down to 5 percent by December 1976. But then price inflation soon began an upward surge that would not end until 1980. The CPI inflation rate rose from 5 percent in December 1976 to 8.9 percent two years later. It finally peaked in 1980 at 14.4 percent.  In other words, Burns's methods did not bring inflation under control for anything more than the short term. Nor did Burns's policies bring robust growth, as the country endured another recession from 1973 to 1975, and again in 1980. Stagflation set in. Meanwhile, the Burns Fed, much like the Powell Fed, sought to portray price inflation as a temporary matter related to short-term shocks. As noted by Ricardo Reis: [Burns] thought the inflation of 1973 was due to food and oil prices, and the further increase in 1974 was due again to budget deficits (even though those had been small). There was always a temporary shock to explain the persistent drift. Meltzer (2005, 160) describes this period as one when, among the Federal Reserve staff, "they gave special explanations—a relative price theory of the general price level—in effect claiming that the rise in the price level resulted from one-time, transitory changes that they did not expect to repeat." Arthur Burns would have been right at home in the Powell Fed, where inflation is to be blamed on temporary one-time events such as logistical supply shocks and the Russian invasion of Ukraine.  After Burns, 20 Percent Interest Rates It was only after Paul Volcker was installed as the new Fed chairman in August 1979 that the Fed would take the drastic action that was needed.  In 1980, the Fed finally began to significantly depart from the policies of the previous decade. In February, the discount rate was raised to 13 percent, reflected in a federal funds rate that briefly reached 20 percent in late February. Not even that was enough. Inflation was still above 10 percent in mid-1981, and it was in November of that year that the Fed was finally leaving nothing to chance. From late 1980 to mid-1981, the discount rate hovered between 11 percent and 14 percent, while the federal funds rate rose to 20 percent in November 1980 and again in May 1981. Neither of these rates would not fall below 10 percent again until October 1982. By 1983, the inflation rate had fallen to 2.5 percent for the first time since 1967. By 1986, inflation had fallen to 1.2 percent.  The inflation cycle that had begun in the mid-1960s—"the Great Inflation"—was finally ended, although the regime certainly did not learn its lesson. The Reagan administration soon after embraced big spending and big deficits. The US committed to devaluing the dollar through the Plaza Accord in 1985. The Greenspan era began in 1987 with the promise of the Greenspan Put, promising endless monetary inflation in the name of propping up financial markets. The seeds of the next inflation were being planted.  Nonetheless, Arthur Burns serves as an important cautionary tale. Burns believed he could end price inflation through small-scale short-term tinkering that did not involve the unpleasant work of popping bubbles and liquidating malinvestments that had sprung up due to previous monetary inflation. This, combined with ending monetary inflation, is the only way that inflation can ultimately be "fixed."  Jerome Powell appears to subscribe to the Burnsian way of thinking, however. If his comments in congressional testimony and press conferences are any indication, Powell still believes it is possible to "solve" price inflation through extremely mild increases to key interest rates and through miniscule reductions in the scale of the Fed's portfolio.  It is entirely possible that this plan will give the appearance of "working." After all, the US economy is so dependent on easy money from the central bank at this point that it may not take much monetary tightening to bring on a short recession of the sort we saw repeatedly in the '70s. That's probably the direction we're headed in now.  The larger question, however, is whether or not Powell's ultramild tightening plans will be enough to truly end the bubble economy that we're now living in. After thirteen years of "unconventional" monetary policy, countless bubbles have been created and can only survive so long as the Fed keeps the easy money coming. There is no sign inside the Fed of the political will necessary to pop these bubbles. Chairman Powell claims that he admires Volcker, but it's increasingly clear Powell is really a student of Burns. Tyler Durden Fri, 07/01/2022 - 13:45.....»»

Category: worldSource: nytJul 1st, 2022

Tesla Will Soon Report A Terrible Q2: Shortseller

Stanphyl Capital letter to investors for the month ended June 30, 2022, discussing their short thesis for Tesla Inc (NASDAQ:TSLA). Tesla’s Gigantic Money Furnaces Losing Billions Of Dollars In an interview released in June but conducted in late-May with a local Tesla fan club, Elon Musk called Tesla Inc (NASDAQ:TSLA)’s new German and Texas factories […] Stanphyl Capital letter to investors for the month ended June 30, 2022, discussing their short thesis for Tesla Inc (NASDAQ:TSLA). Tesla’s Gigantic Money Furnaces Losing Billions Of Dollars In an interview released in June but conducted in late-May with a local Tesla fan club, Elon Musk called Tesla Inc (NASDAQ:TSLA)’s new German and Texas factories “gigantic money furnaces losing billions of dollars.” Yet in the quarterly conference call just five weeks prior to that he implied things were going great at those factories… if (typeof jQuery == 'undefined') { document.write(''); } .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 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 Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton 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); Q1 2022 hedge fund letters, conferences and more So, as Zach said, we remain confident of a 50% growth in vehicle production in 2022 versus ‘21. I think, we actually have a reasonable shot at a 60% increase over last year. So, let’s see. Obviously, we ramped production, as you will know, with Giga Berlin and Giga Texas in the past few months. So, with two fantastic factories with great teams, and they are ramping rapidly. Now, with new factories, the initial ramp always looks small, but it grows exponentially. So, I have very high confidence in the teams of both factories. And we expect to ramp those initially slowly, but like I said, growing exponentially with them achieving high volume by the end of this year. …and then proceeded to almost immediately dump billions of dollars in TSLA stock. Back when this country had an SEC that prioritized “corporate fraud” over nonsensical crap such as “climate change disclosures” it might have taken a look at this, but under Trump and now Biden the SEC has become one of the most useless agencies in Washington, which is quite an accomplishment considering its competition! We also learned in June that Tesla only fulfilled its obligation to report a series of serious Autopilot accidents to the NHTSA after the NHTSA had already learned about them. Elon Musk remains the most vile person ever to head a large-cap U.S. public company, and we remain short Tesla, the biggest bubble-stock in modern market history, because: It has a flat-to-sliding share of the world’s EV market and a share of the overall auto market that’s only around 1.5%, yet a market cap greater than the next 9 largest automakers (by market cap) combined despite selling fewer than 3% of the cars they do. It has no “moat” of any kind; i.e., nothing meaningfully proprietary in terms of its electric car technology (which has now been equaled or surpassed by numerous competitors), while existing automakers—unlike Tesla­—have a decades-long “experience moat” of knowing how to mass-produce, distribute and service high-quality cars consistently and profitably. Meanwhile, its previously proprietary Superchargers are being opened to everyone. Excluding working capital benefits and sunsetting emission credit sales Tesla generates only minimal free cash flow. Growth in sequential unit demand for Tesla’s cars is at a crawl relative to expectations. Elon Musk is a pathological liar. A Terrible Q2 Tesla will soon report a terrible Q2 (even before accounting for a roughly $500 million Bitcoin write-down), with deliveries down substantially from Q1, which itself showed no growth over Q4. However, Q2’s decrease was due to a monthlong COVID-related closing of Tesla’s Shanghai factory, and thus it might be a while yet before we can get a “clean” demand picture for the company. Regardless, Tesla has objectively lost its “product edge,” with many competing cars now offering comparable or better real-world range, better interiors, similar or faster charging speeds and much better quality. (Tesla ranks second-to-last in Consumer Reports’ reliability survey while British consumer organization Which? found it to be one of the least reliable cars in existence.) Thus, due to competitors’ temporary production constraints, waiting times are now longer for many of Tesla’s direct EV competitors than they are for a Tesla. (Here’s one example, and here’s another.) In fact, Tesla is now the second, third or fourth choice for many EV buyers, and only maintains its volume lead though a short-lived edge in production capacity that will disappear over the next 12 to 36 months as competitors rapidly increase the ability to produce their superior EVs. In fact, Tesla’s poorly-built Model Y faces current (or imminent) competition from the much better made (and often just better) electric Hyundai Ioniq 5, Kia EV6, Ford Mustang Mach E, Cadillac Lyriq, Nissan Ariya, Audi Q4 e-tron, BMW iX3, Mercedes EQB, Volvo XC40 Recharge and Polestar 3. And Tesla’s Model 3 now has terrific direct “sedan competition” from Volvo’s beautiful Polestar 2, the great new BMW i4, the upcoming Hyundai Ioniq 6 and Volkswagen Aero, and multiple local competitors in China—here, from Snowbull Capital’s @TaylorOgan, is just one example of that Chinese competition: And in the high-end electric car segment worldwide the Porsche Taycan (the base model of which is now considerably less expensive than Tesla’s Model S) outsells the Model S, while the spectacular new Mercedes EQS, Audi e-Tron GT and Lucid Air make it look like a fast Yugo, and the extremely well reviewed new BMW iX and Mercedes EQS SUV do the same to the Model X. The worst thing that can possibly happen to “the Tesla story” will be when its German and Texas plants are fully operational and the subsequent excess capacity stares the world right in the face, thereby ending its myth of “unlimited demand” (especially at current, drastically-raised prices, where the cheapest Model 3 now starts at $47,000 and the cheapest Model Y begins at $66,000); in fact, look for margin-destroying price cuts by late this year or early 2023. Tesla Is Netflix Indeed, for years I’ve said “Tesla is Blackberry”—the maker of a first-generation version of a product that—once the market was proven—would be supplanted into niche obscurity by newer, better versions; now I can provide a much more recent analogy: Tesla is Netflix. For years Netflix had an absurd valuation based on its pioneering position in streaming media, but once it proved that such a market existed myriad competitors swarmed all over it, and in April the stock collapsed when we learned that not only is Netflix no longer in “hypergrowth” mode but for the first time since 2011 (when it transitioned from physical DVDs) it actually lost subscribers. I believe Musk knows that Tesla is “the next Netflix” (hence his recent “Twitter buying distraction”), with VW, Hyundai/Kia, Ford, GM, BMW, Mercedes, BYD & other Chinese competitors and, in a few years, Toyota & Honda, being the Disney, HBO Max, Amazon Prime, Peacock, Hulu, Paramount +, etc., of the electric car market, stealing Tesla’s share and eventually pounding its stock price down 95% or so from today’s, into the valuation of “just another car company.” Meanwhile, in June the NHTSA announced that its investigation of Tesla’s deadly Autopilot has expanded into “an engineering analysis,” the last required step before (finally!) demanding a full recall. The refund liability potential for Tesla for this is in the billions of dollars, and possibly even the tens of billions if a class action lawsuit proves that the cars involved were purchased solely due to the (fallacious) promise of “full self-driving.” And, of course, there will be a massive “valuation reappraisal” for Tesla’s stock as the world wakes up to the fact that Tesla’s so-called “autonomy technology” is just trailing-edge garbage. Also in June the NHTSA released some raw data about driver assistance system crashes, and over 70% of them involved Teslas. (For all Tesla deaths cited in the media—which is likely only a small fraction of those that have occurred—see Also interesting is that—unlike for other systems—in the vast majority of cases the Autopilot Teslas hit something rather than “were hit,” as was the case for more advanced systems (Level 4). And Tesla has sold this trashy software for over five years now: …and still promotes it on its website via a completely fraudulent video! Meanwhile, the “record” profits that accompanied Q1’s nearly flat delivery number were obtained via myriad one-time items, including $679 million of emission credit sales that will disappear over the next year or two as every automaker ramps up its EV sales, a mysterious $502 million reduction in SG&A expense (of which only $140 million was due to reduced stock comp) despite opening new factories in Germany and Texas (what is Tesla capitalizing instead of expensing???) and a combination of FIFO accounting and multiple sticker price increases that allowed Tesla to expense rapidly rising raw materials costs at older, lower prices while selling cars built from those materials at new, considerably higher prices. And, as cited here previously, Tesla practices consistently fraudulent warranty accounting. Adjusting for these factors, Tesla had GAAP earnings for the quarter that were at least $1/share lower than the posted $2.86, and annualizing that realistic $1.86/share to $7.44 means that at June’s closing price Tesla (on a no-growth quarter) had a PE ratio of around 90 vs. an industry-wide figure in the mid-single digits. Meanwhile, excluding growth in net payables and $993 million in sunsetting emission credit sales, Tesla’s free cash for Q1 2022 and Q4 2021 combined was just $950 million, which annualizes to only around $1.9 billion*. A 15x multiple on this (roughly a 100% premium to BMW’s multiple) would make TSLA stock worth only around $28/share! *And I’m not even backing out Tesla’s massively dilutive stock comp An Energy Company And for those of you who think that Tesla is “really an energy company,” in Q1 “Tesla Energy” had revenue of just $616 million (down 10.5% sequentially) and cost of revenue of $688 million, meaning it had a negative gross margin. So if Tesla is “really an energy company,” it’s even more screwed than if it’s just a car company! Meanwhile, many Tesla bulls sincerely believe that ten years from now the company will be twice the size of Volkswagen or Toyota, thereby selling around 20 million cars a year (up from the current run-rate of around 1.3 million); in fact in March Musk himself even raised this as a possibility. To illustrate how utterly absurd this is, going from 1.3 million cars a year today to 20 million in ten years means that in addition to one million cars a year of eventual production from the new German and Texas factories, Tesla would have to add 35 more brand new 500,000 car/year factories with sold out production; i.e., a new factory nearly every single quarter for ten years! Another favorite hype story from Tesla bulls has been “the China market,” but Tesla’s Q1 2022 domestic China sales sequentially declined by approximately 8000 units vs. Q4 2021, and it had only around 1.9% of the overall Chinese passenger vehicle market and has flatlined at only around 10% of the BEV market. In other words, “Tesla China” is no longer “a growth story”: Another favorite Tesla hype story has been built around so-called “proprietary battery technology.” In fact though, Tesla has nothing proprietary there—it doesn’t make them, it buys them from Panasonic, CATL and LG, and it’s the biggest liar in the industry regarding the real-world range of its cars. And if new-format 4680 cells enter the market some time in 2024 (as is now expected), even if Tesla makes some of its own,  other manufacturers will gladly sell them to anyone. And oh, the joke of a “pickup truck” Tesla previewed in 2019 (and still hasn’t shown in production-ready form) won’t be much of “growth engine” either, as it will enter a dogfight of a market; in fact, Ford’s terrific 2022 all-electric F-150 Lightning now has over 200,000 retail reservations (plus many more fleet reservations), GM has introduced its fantastic 2023 electric Silverado which already has nearly 200,000 reservations and Rivian’s pick-up has gotten excellent early reviews. Regarding safety, as noted earlier in this letter, Tesla continues to deceptively sell its hugely dangerous so-called “Autopilot” system, which Consumer Reports has completely eviscerated; God only knows how many more people this monstrosity unleashed on public roads will kill despite the NTSB condemning it. Elsewhere in safety, the Chinese government forced the recall of tens of thousands of Teslas for a dangerous suspension defect the company spent years trying to cover up, and now Tesla has been hit by a class-action lawsuit in the U.S. for the same defect. Tesla also knowingly sold cars that it knew were a fire hazard and did the same with solar systems, and after initially refusing to do so voluntarily, it was forced to recall a dangerously defective touchscreen. In other words, when it comes to the safety of customers and innocent bystanders, Tesla is truly one of the most vile companies on Earth. Meanwhile the massive number of lawsuits of all types against the company continues to escalate. So Here Is Tesla’s Competition In Cars... (note: these links are regularly updated) Porsche Taycan Porsche Taycan Cross Turismo Porsche Macan Electric SUV Officially Coming in 2023 Volkswagen ID.3 Volkswagen ID.4 Electric SUV Volkswagen unveils ID.6 SUV EV in China Volkswagen ID.Buzz Electric Van Volkswagen unveils the ID. AERO sedan with 385 miles of range New sketch of 2025 Volkswagen ID.1 unveiled VW’s Cupra Born Volkswagen unveils $7.1B commitment to boost product line-up, R&D, mfg in N. America Audi e-tron Audi e-tron Sportback Audi E-tron GT Audi Q4 e-tron Audi Q6 e-tron confirmed for 2022 launch 2022 Audi A6 e-tron set to take on Tesla Audi will expand EV lineup with electric A6 wagon Audi TT to be axed in 2023 for 'emotional', electric replacement Hyundai Ioniq 5 Hyundai Ioniq 6 Will Be a Slick-Looking EV Sedan Hyundai Kona Electric Genesis reveals their first EV on the E-GMP platform, the electric GV60 crossover Genesis Electrified GV70 Revealed With 483 Horsepower And AWD Kia Niro Electric: 239-mile range & $39,000 before subsidies Kia EV6: Charging towards the future Kia EV9 to land in US in 2023 with 300-miles range, $50,000 price Kia EV4 on course to grow electric SUV range Jaguar’s All-Electric i-Pace Jaguar to become all-electric brand; Land Rover to Get 6 electric models Daimler will invest more than $47B in EVs and be all-electric ready by 2030 Mercedes EQS: the first electric vehicle in the luxury class 2023 Mercedes EQS SUV Is a Seven-Seat EV Flagship with up to 536 HP 2023 Mercedes EQE Electric Sedan Mercedes EQE SUV to rival BMW iX and Tesla Model X Mercedes EQC electric SUV available now in Europe & China Mercedes-Benz Launches the EQV, its First Fully-Electric Passenger Van Mercedes-Benz EQB Makes Its European Debut, US Sales Confirmed Mercedes-Benz unveils EQA electric SUV with 265 miles of range and ~$46,000 price Ford Mustang Mach-E Available Now Ford F-150 Lightning electric pick-up available 2022 Ford set to launch ‘mini Mustang Mach-E’ electric SUV in 2023 Ford to launch 7 EVs in Europe in big electric push Ford unveils Lincoln Star electric SUV concept as it readies to add four new EVs by 2026 Polestar 2 sedan Polestar 3 SUV With 372-Mile Range Coming Late 2022 Volvo XC40 Recharge Volvo C40 Recharge Chevrolet Bolt sedan, 259-mile range starting at $31,000 Chevrolet Bolt EUV electric crossover Cadillac All-Electric Lyriq Available Spring 2022 GMC 2022 ALL-ELECTRIC SUPERTRUCK HUMMER EV GM’s 2023 electric Silverado pickup truck GMC to launch electric Hummer SUV in 2023 2023 Chevrolet Blazer EV primed to take on Tesla Model Y GM Launches BrightDrop to Electrify the Delivery of Goods and Services GM & Honda Will Codevelop Affordable EVs Targeting Most Popular Vehicle Segments Honda pours $40 billion into electrification, targets 2 million EV production by 2030 Honda and Sony finalize 50-50 joint venture to build EVs in 2025 BMW leads off EV offensive with iX3 BMW expands EV offerings with iX tech flagship and i4 sedan BMW i7 EV, with 600 hp, will be most powerful variant of new 7 Series flagship BMW iX1 Revealed With 313 HP, 272 Miles WLTP Range Renault-Nissan alliance plows $26B into EV blitz- will jointly launch 35 new EVs Nissan vows to hop back on EV podium with Ariya Nissan LEAF e+ with 226-mile range is available now Nissan Unveils $18 Billion Electric-Vehicle Strategy Renault upgrades Zoe electric car as competition intensifies Renault Dacia Spring Electric SUV Renault to boost low-volume Alpine brand with 3 EVs Renault's electric Megane will debut new digital cockpit Stellantis promises 'heart-of-the-market SUV' from new, 8-vehicle EV platform Chrysler to go all-EV by 2028 Alfa Romeo's First Electric Car Will Arrive in 2024 Peugeot e-208 PEUGEOT E-2008: THE ELECTRIC AND VERSATILE SUV Peugeot 308 will get full-electric version Subaru shows off its first electric vehicle, the Solterra SUV Citroen compact EV challenges VW ID3 on price Rivian R1T Is the Most Remarkable Pickup We’ve Ever Driven Maserati going fully electric by 2030 -all vehicles will offer a BEV version by 2025 Mini Cooper SE Electric Toyota’s Electric bZ4X Goes On Sale in Spring 2022 Toyota will have lineup of 30 full EVs by 2030; Lexus will be all-electric brand Honda and Sony to build, sell EVs by 2025 Opel sees electric Corsa as key EV entry 2021 Vauxhall Mokka revealed as EV with sharp looks, massive changes Skoda Enyaq iV electric SUV offers range of power, battery sizes Electric Skoda Enyaq coupe to muscle-in on Tesla Model 3 Skoda plans small EV, cheaper variants to take on French, Korean rivals Nio to launch in five more European countries after Norway BYD will launch electric SUV in Europe The Lucid Air Achieves an Estimated EPA Range of 517 Miles on a Single Charge Bentley will start output of first full EV in 2025 All-electric Rolls-Royce Spectre to launch in 2023 – firm to be EV-only by 2030 Aston Martin will build electric vehicles in UK from 2025 Meet the Canoo, a Subscription-Only EV Pod Coming in 2021 Two new electric cars from Mahindra in India; Global Tesla rival e-car soon Former Saab factory gets new life building solar-powered Sono Sion electric cars Foxconn aims for 10% of electric car platform market by 2025 And In China, Where Tesla’s EV Market Share Is Stuck At 10% And Not Growing… BYD is #1 in Chinese EVs, selling FAR more than Tesla Volkswagen to boost Chinese EV capacity to 1m by 2023 Audi-FAW's $3.3 billion electric vehicle venture Nio Xpeng Motors Hozon/Neta Li Auto GAC Aion Leap Motors GM launches Ultium EV production platform in China Ford Mustang Mach-E Rolls Off Assembly Line in China Cheaper than Tesla: Honda takes aim at China's middle class BMW i3 Debuts As All-Electric 3 Series Only For China Hongqi Geely Zeekr Premium EVs by Geely Baidu and Geely put nearly $400 million more into their electric car venture Mercedes-Benz Said To Build EV In China From 2024 BAIC Hyundai, BAIC Motor to inject $942 mn in China JV for EVs Toyota partners with BYD to build affordable $30,000 electric car Lexus RZ 450e Steers For China Dongfeng SAIC Renault launches sales of first EV in China Nissan expects 40% of sales in China to be electrified by 2026 Changan forms subsidiary Avatar Technology to develop smart EVs with Huawei, CATL WM Motors/Weimar Chery Seres Enovate Singulato JAC Motors Iconiq Motors Aiways Skyworth Auto Youxia Human Horizons Xiaomi announces plans for four electric vehicle models Here's Tesla's Competition In Autonomous Driving; The Independents All Have Deals With Major OEMs… Waymo ranked top & Tesla last in Guidehouse leaderboard on automated driving systems Tesla has a self-driving strategy other companies abandoned years ago Waymo operates robotaxis NOW GM’s Cruise operates robotaxis NOW Argo AI (owned by Ford & VW) Begins Driverless Vehicle Operations in Miami & Austin Mobileye operates driverless test fleets in Europe and the U.S. Cadillac Super Cruise Sets the Standard for Hands-Free Highway Driving Ford’s hands-free “Blue Cruise” Mercedes Launches SAE Level 3 Drive Pilot System Honda Legend Sedan with Level 3 Autonomy Now Available in Japan Hyundai + Motional Bringing IONIQ 5 robotaxis to the streets from 2023 Amazon’s Zoox will test its autonomous vehicles on Seattle’s rainy streets Baidu Apollo’s autonomous driving service is now inclusive to all the megacities in China Alibaba-backed AutoX unveils first driverless RoboTaxi production line in China approved for public driverless robotaxi service in Beijing Here's Where Tesla's Competition Will Get Its Battery Cells... Panasonic (making deals with multiple automakers) LG Samsung SK Innovation Toshiba CATL BYD Northvolt Volkswagen to Build Six Electric-Vehicle Battery Factories in Europe GM’s Ultium GM to develop lithium-metal batteries with SolidEnergy Systems Ford, SK Innovation announce EV battery joint venture BMW & Ford Invest in Solid Power to Secure All Solid-State Batteries for Future Electric Vehicles Stellantis affirms commitment to build battery factory in Italy with Mercedes, TotalEnergies Stellantis and Samsung SDI to Invest Over $2.5B in Battery Production Plant in United States Stellantis and LG to Invest Over $5 Billion CAD in Joint Venture for Li-Ion Battery Plant in Canada Stellantis and Factorial Energy to Jointly Develop Solid-State Batteries for Electric Vehicles Mercedes-Benz to build 8 battery factories in push to become electric-only automaker Mercedes-Benz and Sila achieve breakthrough with high silicon automotive battery Toyota to build plant in N.C. capable of making up to 1.2M batteries a year Toyota Outlines Solid-State Battery Tech, $13.6 Billion Investment Nissan Announces Proprietary Solid-State Batteries Daimler joins Stellantis as partner in European battery cell venture ACC Renault signs EV battery deals with Envision, Verkor for French plants Nissan to build $1.4bn EV battery plant in UK with Chinese partner UK companies AMTE Power and Britishvolt plan $4.9 billion investment in battery plants Foxconn breaks ground on first EV battery plant Freyr Verkor Farasis Microvast Akasol Cenat Wanxiang Eve Energy Svolt Romeo Power ProLogium Hyundai Motor developing solid-state EV batteries Morrow Here's Tesla's Competition In Charging Networks... Infrastructure Bill: $7.5 billion Towards Nationwide Network of 500,000 EV Chargers Electrify America EVgo Chargepoint Ionity Europe Shell 51 U.S. electric companies commit to build nationwide EV fast charging network by end of 2023 GM to Expand Access to EV Charging with More than 40,000 Charging Stations Volkswagen powers up the grid to take on Tesla Circle K begins North American EV fast charger rollout, plans 200-site network by 2024 Porsche to build out its own network of EV charging stations Petro-Canada Coast-to-Coast Canadian Charging Network Volta E.On BP Volkswagen and BP partner to deploy up to 8,000 EV chargers across EU/UK Smatric Allego Podpoint Instavolt Fastned Total Nio Battery Swap Stations BMW to Build 360,000 Charging Points in China to Juice Electric Car Sales Evie And here’s Tesla’s competition in storage batteries… Panasonic Samsung LG Energy Solutions CATL BYD AES + Siemens (Fluence) GE Hitachi ABB Toshiba Saft Johnson Contols EnerSys SOLARWATT Sonnen Generac Kokam Eaton Tesvolt Leclanche Lockheed Martin Honeywell EOS Energy Storage ESS Electriq Power Redflow Primus Power Simpliphi Power Invinity Murata Bollore Adara Blue Planet Aggreko Orison Powin Energy Nidec Powervault Kore Power Shanghai Electric LithiumWerks Natron Energy Energy Vault Ambri Voltstorage Cadenza Innovation Morrow Gridtential Villara Elestor SolarEdge Q-Cells Huawei Toyota ADS-TEC Form Energy Enphase Sumitomo Electric Stryten Energy Freyr Growatt Polarium Thanks, Mark Spiegel Updated on Jul 1, 2022, 10:56 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 1st, 2022

Here"s Why You Should Add MetLife (MET) to Your Portfolio Now

MetLife (MET) continues to benefit on the back of strong VII driving its margins, varied product launches, direct expense ratio below its targeted level and a strong cash position. MetLife, Inc. MET remains well-poised for growth, courtesy of sustained performance of variable investment income (VII), diversified product suite, cost-cutting efforts and strong liquidity stand.Zacks Rank & Price PerformanceMetLife carries a Zacks Rank #2 (Buy) currently.The stock has gained 4% over a year against the industry’s decline of 14.5%. The Zacks Finance sector has lost 13.5% in the said time frame. Meanwhile, the S&P 500 composite has declined 12%.Image Source: Zacks Investment ResearchFavorable Style ScoreMetLife carries an impressive Value Score of A. Value Score helps find stocks that are undervalued. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment bets.Impressive Earnings Surprise HistoryMET boasts an impressive earnings surprise record. It has surpassed earnings estimates in each of the trailing four quarters, the average surprise being 42.90%.Northbound Estimate RevisionThe Zacks Consensus Estimate for 2022 and 2023 earnings has been revised upward by 5.9% and 2%, respectively, in the past 60 days.ValuationPrice-to-book (P/B) is one of the multiples used for valuing insurance stocks. Compared with the multiline industry’s trailing 12-month P/B ratio of 1.6, MetLife has a reading of 0.9. It is quite evident that the stock is currently undervalued.Solid Return on EquityThe ROE of MetLife stands at 12% in the trailing 12 months, which remains higher than the industry average of 9.2%. This reflects MET’s efficiency in utilizing its shareholders’ funds.Business TailwindsMargins of MetLife continue to benefit from strong VII. A recovering economy signaling an improving operating environment and interest rate hikes are expected to sustain the sound performance of the metric in the days ahead.MetLife resorts to acquisitions and partnerships to boost its capabilities and strengthen its nationwide presence. Continuous product launches in different fields like MyPets rewards program, Structured Installment Sale solution, 360Health solution and others enable MET to foray into diverse streams of business. The multiline insurer makes constant efforts to keep pace with the ongoing digital trend, which has fueled noticeable demand for digital security benefits to the workforce. In February 2022, MetLife entered into an alliance with the renowned intelligent safety solutions provider Aura to distribute the latter’s digital security solutions within MET’s U.S. Group Benefits platform.MetLife continues to undertake prudent cost-cutting initiatives with an aim to provide a boost to the bottom line. As part of the same endeavor, MET expects the direct expense ratio to remain below the targeted figure of 12.3% for 2022. Meanwhile, it has been divesting underperforming businesses to intensify its focus on high-growth ones and generate increased free cash flows, which in turn will aid MetLife in pursuing several growth-related initiatives.MetLife boasts of a strong financial position, supported by a sound cash balance sufficient enough to cover the short-term obligations of the multiline insurer and encouraging it to continuously pursue tactical deployment of capital through share buybacks and dividend hikes. In May 2022, MET approved a share repurchase program of $3 billion. Its dividend yield of 3.2% compares favorably with the industry’s figure of 2.5%.Other Stocks to ConsiderSome other top-ranked stocks in the insurance space include American International Group, Inc. AIG, MGIC Investment Corporation MTG and Chubb Limited CB, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The bottom line of American International outpaced estimates in each of the trailing four quarters, the average surprise being 18.87%. The Zacks Consensus Estimate for AIG’s 2022 earnings suggests 1.2% year-over-year growth, while the same for revenues implies an improvement of 0.6%. The consensus mark for American International’s 2022 earnings has moved north by 2% in the past 60 days.MGIC Investment’s earnings outpaced estimates in three of the trailing three quarters and met once, the average surprise being 10.94%. The Zacks Consensus Estimate for MTG’s 2022 earnings indicates 18.9% year-over-year growth. MGIC Investment’s consensus mark for 2022 earnings has moved north by 1.8% in the past 60 days.The bottom line of Chubb outpaced estimates in each of the trailing four quarters, the average surprise being 13.45%. The Zacks Consensus Estimate for CB’s 2022 earnings suggests 19.1% year-over-year growth, while the same for revenues implies an improvement of 3.9%. The consensus mark for Chubb’s 2022 earnings has moved north by 0.3% in the past 60 days.Shares of MGIC Investment and Chubb have gained 11% and 19.8%, respectively, in a year. However, American International stock has lost 4.9% in the same time frame. 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 American International Group, Inc. (AIG): Free Stock Analysis Report MGIC Investment Corporation (MTG): Free Stock Analysis Report Chubb Limited (CB): Free Stock Analysis Report MetLife, Inc. (MET): Free Stock Analysis Report To read this article on click here......»»

Category: topSource: zacksJun 30th, 2022

Finally, a Pause in Mortgage Rate Hikes

After several sharp spikes and nearly doubling over the last year, mortgage rates took a breather this week, decreasing from 5.81% the previous week to 5.7% this week, according to the latest Primary Mortgage Market Survey (PMMS) from Freddie Mac, released Thursday. Key findings: 30-year fixed-rate mortgage averaged 5.70% with an average 0.9 point as… The post Finally, a Pause in Mortgage Rate Hikes appeared first on RISMedia. After several sharp spikes and nearly doubling over the last year, mortgage rates took a breather this week, decreasing from 5.81% the previous week to 5.7% this week, according to the latest Primary Mortgage Market Survey (PMMS) from Freddie Mac, released Thursday. Key findings: 30-year fixed-rate mortgage averaged 5.70% with an average 0.9 point as of June 30, 2022, down from last week when it averaged 5.81%. A year ago at this time, the 30-year FRM averaged 2.98%. 15-year fixed-rate mortgage averaged 4.83% with an average 0.9 point, down from last week when it averaged 4.92%. A year ago at this time, the 15-year FRM averaged 2.26%. 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.50% with an average 0.3 point, up from last week when it averaged 4.41%. A year ago at this time, the 5-year ARM averaged 2.54%. What the experts are saying: “The rapid rise in mortgage rates has finally paused, largely due to the countervailing forces of high inflation and the increasing possibility of an economic recession,” said Sam Khater, Freddie Mac’s chief economist. “This pause in rate activity should help the housing market rebalance from the breakneck growth of a seller’s market to a more normal pace of home price appreciation.”® Manager of Economic Research, George Ratiu, commented, “The Freddie Mac fixed rate for a 30-year loan took a breather in the wake of a three-week 72-basis point ascent, declining to 5.70% this week, mirroring the pullback in the 10-year Treasury. With the drumbeat of a possible recession growing louder, investors have been seeking safer assets, driving bond yields lower again this week. Rising prices are eating into consumers’ paychecks, leaving many Americans with less money for discretionary spending. In addition, with inflation outpacing pay raises, most workers are seeing their income fall behind, further straining the finances of buyers who are also facing higher borrowing costs. “At the midpoint of 2022, housing markets are clearly headed for a reset, as rising supply is blending with cooling demand. The number of homeowners listing their homes for sales has been growing for two straight months compared with a year ago, bringing more options for homebuyers to choose from. The median home price hit a new record in June, reaching $450,000, a 17% gain from last year. At that price, combined with today’s fixed rate for a 30-year loan, homebuyers are looking at a monthly payment of about $2,100—before adding in taxes, insurance or fees—more than $790 higher than June of 2021. Not surprisingly, this is taking a toll on transactions, and as properties sit on the market longer, the share of those with price reductions is rising. Looking at the next few months, I expect to see further moderation in transactions, followed by a sharper slowdown in price growth. Buyers and sellers will find themselves on more equal footing, a welcome shift after two years of a severely lopsided market during the pandemic,” Ratiu concluded. The post Finally, a Pause in Mortgage Rate Hikes appeared first on RISMedia......»»

Category: realestateSource: rismediaJun 30th, 2022

Don"t Lose Confidence, Scoop Up These 4 Retail Stocks Instead

Consumer confidence sinks for the second straight month in June. But these retailers - Boot Barn Holdings (BOOT), Ulta Beauty (ULTA), Dollar Tree (DLTR) and Kroger (KR) - could still be a great addition to your portfolio. U.S. consumer confidence — a key determinant of the economy’s health — stumbled to a 16-month low in June, as soaring inflation and concerns about the economy’s health dampened the Americans’ spirit. Economists cautioned that a back-to-back drop in consumer sentiment spells trouble for the market and overall spending activity. Per the Conference Board, the Consumer Confidence Index fell to 98.7 in June from May’s downwardly revised reading of 103.2.Lynn Franco, senior director of economic indicators at the Conference Board, said, “Purchasing intentions for cars, homes, and major appliances held relatively steady—but intentions have cooled since the start of the year and this trend is likely to continue as the Fed aggressively raises interest rates to tame inflation. Meanwhile, vacation plans softened further as rising prices took their toll.”Industry experts see more pain ahead as consumers grapple with soaring commodity and record gasoline prices as well as rising interest rates. We note that the consumer price index rose 1% month on month in May, following an increase of 0.3% in April. On a year-over-year basis, the metric rose 8.6% — the fastest pace since December 1981. This jump was a result of higher gasoline and food grain prices, primarily due to the conflict between Russia and Ukraine.Addressing shooting commodity prices is a top priority for the Federal Reserve, and it is treading the path of a rate hike to tame the same. In a bold move to counter inflation, the Fed recently announced a 75-basis point hike in the benchmark interest rate that will take the level to a range of 1.5% to 1.75%. This was the biggest rate increase since 1994.While challenges persist, retailers are still pinning hopes on the back-to-school season. Per Mastercard SpendingPulse, U.S. retail sales, excluding automotive, are projected to increase 7.5% year over year during the period that runs from Jul 14 to Sep 5. With e-commerce still one of the preferred modes for shopping, Mastercard SpendingPulse foresees online sales to rise by 4.3%. Notably, in-store shopping is anticipated to increase 8.2%.Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks Incorporated, said, “While Mastercard SpendingPulse anticipates growth across sectors, retailers will need to find innovative ways to entice shoppers as discretionary spending potentially stretches thin as a result of increasing prices.”Companies have been undertaking a more consumer-centric approach — emphasizing membership programs, upgrading store technology, shopping via mobile apps and last-mile delivery solutions. Expedited delivery services like doorstep delivery, curbside pickup or buy online and pick up at store, as well as contactless payment solutions, will continue to play a crucial role in maximizing the share of customers’ wallet.That said, here we have highlighted four stocks from the Retail-Wholesale sector that have a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Past Year Price Performance Image Source: Zacks Investment Research4 Prominent PicksYou may invest in Boot Barn Holdings, Inc. BOOT. This lifestyle retailer of western and work-related footwear, apparel and accessories has been successfully navigating through the challenging environment, courtesy of merchandising strategies, omni-channel capabilities and better expense management as well as marketing. This, combined with the expansion of the store base, has helped Boot Barn Holdings gain market share and strengthen its position in the industry.The company has an estimated long-term earnings growth rate of 20%. The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 17% and 4.4%, respectively, from the year-ago period.Investors can count on Ulta Beauty, Inc. ULTA. The company has been strengthening its omni-channel business and exploring the potential of both physical and digital facets. It has been implementing various tools to enhance guests' experience, like offering a virtual try-on tool and in-store education, and reimagining fixtures, among others. Ulta Beauty focuses on offering customers a curated and exclusive range of beauty products through innovation.Impressively, this beauty retailer and the premier beauty destination for cosmetics, fragrance, skincare products, hair care products and salon services has a trailing four-quarter earnings surprise of 49.8%, on average. We note that the company has an estimated long-term earnings growth rate of 10.7%. The Zacks Consensus Estimate for Ulta Beauty’s current financial year sales suggests growth of 10.3% from the year-ago period.Another stock worth considering is Dollar Tree, Inc. DLTR. This Chesapeake, VA-based company’s strategic initiatives, including the expansion of $3 and $5 Plus assortment in Dollar Tree stores, as well as Combo Stores and H2 Renovations at Family Dollar, provide tremendous opportunities to drive sales and traffic.Impressively, Dollar Tree has a trailing four-quarter earnings surprise of 13.1%, on average. This operator of discount variety stores has an estimated long-term earnings growth rate of 15.5%. The Zacks Consensus Estimate for Dollar Tree’s current financial year sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the year-ago period.The Kroger Co. KR, which operates in the thin-margin grocery industry, is another potential pick. The company has been undertaking efforts to strengthen its position not only with respect to products but also in terms of the way consumers shop. It has been making investments to enhance product freshness and quality as well as expand digital capabilities. Kroger has been augmenting Our Brands portfolio by launching new products.Kroger has a trailing four-quarter earnings surprise of 20.3%, on average. The company has an estimated long-term earnings growth rate of 11.3%. The Zacks Consensus Estimate for Kroger’s current financial year sales and EPS suggests growth of 6.7% and 6.3%, respectively, from the year-ago period. 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 Dollar Tree, Inc. (DLTR): Free Stock Analysis Report The Kroger Co. (KR): Free Stock Analysis Report Ulta Beauty Inc. (ULTA): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 29th, 2022

The US will avoid stagflation and will suffer milder "slowflation" instead, because inflation has already peaked: UBS

Inflation has already peaked and is now set to ease, according to UBS strategists, who predict a "slowflation" future of slow growth and fairly high inflation. Inflation has peaked, according to UBS strategists.Mark Lennihan/AP Photo UBS said the US economy is likely to enter "slowflation," not stagflation, as inflation has already peaked.  Slowflation is slow growth alongside moderately high levels of inflation, its strategists said Tuesday.  Investors' fears about stagflation are the highest they have been since the 2008 financial crisis, a BofA survey found. The US is likely to dodge stagflation and will suffer "slowflation" instead, which history shows is a better environment for stocks, according to UBS strategists.Stock markets have faltered in 2022 as investors grappled with inflation fears and the prospect of stalled growth, uncertain as to how deep the economic pain will be.One keen worry has been the prospect of stagflation — a toxic mix of persistent inflation and sluggish growth. Investors' fears about stagflation are the highest they have been since the 2008 financial crisis, according to the most recent Bank of America fund manager survey.But the market can expect the slowdown to be less severe, a team of UBS strategists led by Nicolas Le Roux said in a Tuesday note."In the next 12-36 months, we believe we are likely to enter a period of slowflation, which we have defined as a period of 'medium to low' growth combined with 'medium to high' inflation," they wrote.The strategists based their forecast on the view that inflation has already hit its highest level in the US and is likely to ease in future."Inflationary pressures are elevated today, especially in developed markets, but are likely to ease from here, in our view. Our economists believe US inflation has already peaked, and Europe's will do so by September 2022," they said. In May, the rate of inflation in the US accelerated to its fastest pace since December 1981, hitting 8.6%, as energy and food prices surged thanks to Russia's war on Ukraine.That has given the Federal Reserve impetus to push on with its plan to tame inflation with aggressive interest-rate increases, which it kicked off with a 75 basis point hike.Given the Fed is focused on beating inflation, Guggenheim's Scott Minerd said Tuesday it's unlikely to care about the current stock sell-off until panic floods the market.According to UBS, slowflation has been easier on stocks, based on an analysis of episodes dating back to 1970. They found sectors had average monthly returns were 0.36% positive, compared with 0.27% negative for stagflation."Stocks have unsurprisingly delivered better returns during slowflation [...] than during stagflation periods," they said.But several influential commentators see stagflation as a more likely outcome. Noted economist Mohamed El-Erian, has said stagflation is unavoidable, while hedge fund giant Bridgewater has warned the US is on the cusp of stagflation and markets are yet to fully realize it.Read more: Buy these 13 cheap stocks that will outperform in a recession-fueled bear market, according to Morningstar Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJun 29th, 2022

Why You Must Add American International (AIG) to Your Portfolio

American International (AIG) is likely to buy back $3.9 billion of common shares by 2022 end. American International Group, Inc. AIG is well poised to grow on the back of strategic acquisitions and its multi-year transformative program. Improving travel and warranty business is likely to drive AIG’s Personal lines insurance business in the coming days.American International — with a market cap of $41.8 billion — is a leading global insurance organization. Building on its long history, AIG provides a wide range of property casualty and different types of liability insurances. AIG also includes multiple types of auto insurances and health products.Courtesy of solid prospects, this presently Zacks Rank #2 (Buy) stock is worth snapping up at the moment.Rising EstimatesThe Zacks Consensus Estimate for American International’s 2022 earnings is pegged at $5.18 per share, indicating a 1.2% rise from the year-ago reported figure. AIG has witnessed two upward estimate revisions in the past 60 days against none in the opposite direction. AIG beat on earnings in each of the last four quarters, the average being 18.9%.American International Group, Inc. Price and EPS Surprise American International Group, Inc. price-eps-surprise | American International Group, Inc. QuoteThe consensus estimate for 2022 revenues stands at $48.3 billion, suggesting a 0.6% rise from the year-ago reported figure.VGM ScoreAmerican International currently has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.Key DriversAIG’s focus on improving costs to boost its profit levels is noteworthy. American Internationalundertook a transformative program named AIG 200, which is a global, multi-year initiative to achieve transformational changes. The program has provided an $810-million cost-saving so far. AIG expects to achieve run-rate savings worth $1 billion by the end of 2022.The expense ratio also improved 170 basis points (bps) in 2021 and 120 bps in first-quarter 2022, courtesy of alteration in business mix, ongoing expense discipline and an improved premium base. These initiatives will lead to operational efficiency and provide an extra boost to its operating margins. Also, to support its AIG 200 strategy, American International selected, Inc.’s AMZN cloud computing platform Amazon Web Services as its preferred public cloud provider.Opting for Amazon Web Services will enable large-scale digital transformation and move most of AIG’s workloads off the legacy platforms, thereby enhancing security and market opportunities. This move will likely stimulate the leading global insurance firm’s long-term growth process and business expansion.American International is expected to witness higher investment income from its General Insurance North America operations, primarily owing to growing interest rates, which will likely reduce the inflation rates. The Fed in the United States is expected to opt for multiple aggressive interest rate hikes this year to counter the fastest inflation pace witnessed in more than 40 years.American International’s Commercial lines business is witnessing growth in both North America and internationally. Continuous rate increases, solid retention rates and a strong new business production will keep boosting the business in the future. Also, its Personal lines insurance business is expected to witness growth in the travel and warranty business. Improving consumer spending is likely to drive AIG’s net written premiums and revenue growth in the days ahead.AIG’s prudent capital allocation to buyouts and shareholder value addition is a major positive. Strategic acquisitions at an opportune time like Validus Holdings, Ltd. and Glatfelter Insurance Group are strengthening American International’s global General Insurance business. Further, its capital-deployment efforts are likely to enhance shareholder value through share buybacks and dividend payouts. AIG is likely to buy back $3.9 billion of common shares by 2022 end. The board of directors approved an increase in the total share buyback authorization to $6.5 billion.RisksThere are a few factors that might mar American International’s prospects.In the trailing 12-month period, AIG’s free cash flow declined 9.3% to $5.7 billion. Also, American International's return on equity of 7.1% is lower than the industryaverage of 9.2%. This reflects AIG's relative inefficiency in utilizing its shareholders’ funds to generate profits. Nevertheless, we believe that a systematic and strategic plan of action will drive AIG’s long-term growth.Other Key PicksSome other top-ranked stocks in the broader finance space are MetLife, Inc. MET and SelectQuote, Inc. SLQT, each carrying a Zacks Rank of 2 at present.Based in New York, MetLife is an insurance-based global financial services company providing protection and investment products to a range of individual and institutional customers. The Zacks Consensus Estimate for MET’s 2022 bottom line has increased 5.9% in the past 60 days.Overland Park, KS-based SelectQuote has a technology-enabled distribution platform, helping clients choose policies from multiple options. The Zacks Consensus Estimate for SLQT’s 2022 bottom line has improved 12% in the past 60 days. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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, Inc. (AMZN): Free Stock Analysis Report American International Group, Inc. (AIG): Free Stock Analysis Report MetLife, Inc. (MET): Free Stock Analysis Report SelectQuote, Inc. (SLQT): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 28th, 2022

Lufthansa is bringing back its beloved A380 jet next year, reversing a pandemic-era decision. Here are the airlines that have resumed flying the plane since 2020.

The A380 fell out of favor with some airlines when the pandemic hit, but many are now dusting off the cobwebs and restoring the jet to service. A Lufthansa Airbus A380.Chittapon Kaewkiriya / The Airbus A380 is continuing to make a comeback as travel demand booms post-pandemic. Several carriers restored the double-decker to service in 2020 and 2021, with Lufthansa announcing a 2023 return. Other airlines have permanently said goodbye to their A380s in favor of more economical planes.  The world's largest passenger plane is continuing to make its comeback as pandemic-era travel restrictions fade away.Airbus A380AirbusAirbus' behemoth A380 stood out in a world deprived of air travelers early on in the pandemic. The ability to fly a huge number of passengers — over 600 people — in a single plane, which the A380 once represented, made it temporarily obsolete.AirbusBut, as pent-up demand for international travel rages this summer, airlines that sent their A380s to storage are now dusting off the cobwebs and getting ready to connect people again.An Emirates Airbus A380.Arnold Aaron/Shutterstock.comHere's how the A380 is making a comeback after being mostly forgotten and abandoned during the pandemic.Airbus A380 MSN1.Ben Birchall/PA Images/Contributor via Getty ImagesFour-engine aircraft, including the Airbus A380 and Boeing 747, were among the most impacted during COVID-19. Airlines no longer needed the amount of space that the aircraft offered — combined with the excessive cost of two additional engines when only two were needed.Emirates Airbus A380Sundry Photography/ShutterstockHere's how the pandemic accelerated the demise of four-engine aircraft like the Airbus A380 and Boeing 747.The A380 also didn't have the benefit of having a second life in the air-cargo realm, as other airliners did, despite its size. Though, that didn't stop some carriers from using the A380 as a makeshift freighter.A Hi Fly Airbus A380 cargo conversion.Hi FlyHere's how one charter airline hollowed out an Airbus A380 for use as a cargo freighter.Destined to fly passengers, some airlines started bringing back the A380 shortly after the onset of COVID-19, with others adding it back into their networks for the first time this year as demand continues to skyrocket.An Airbus A380 operated by Lufthansa.Silas Stein/picture alliance via Getty Images.Emirates, in its role as the world's largest Airbus A380 operator, was unsurprisingly one of the first airlines to restore the mammoth plane.An Emirates Airbus A380 and an American Airlines A321.Philip Pilosian / Shutterstock.comDubai opened to international travelers in July 2020, ahead of most global tourist destinations, and Emirates responded by adding A380 flights to London and Paris the same month.Emirates Airbus A380kamilpetran/ShutterstockSource: Cirium Diio MiSince then, the A380 has returned to many of the Emirates destinations it once served, including the US. The carrier also took delivery of its last-ever A380 during the pandemic, marking a huge milestone for the operator.The final Airbus A380 bound for Emirates.Airbus-Lutz BorckEmirates will receive the last Airbus A380 ever in November. Here's how the world's largest passenger plane went from revolutionary to reject in just a decade.According to aviation-data provider Cirium, the carrier resumed flights between Dubai and New York-JFK on June 21, 2021, followed by flights to Los Angeles, Washington DC, and San Francisco. Emirates' "fifth-freedom" flight between Milan and JFK started in December 2021.Emirates' first-ever Airbus A380, registered A6-EDANYC RussSource: Cirium Diio MiAll of Emirates' A380 luxuries have also been restored, including caviar in first class and in-flight showers.The bathroom of a first class cabin inside an Emirates Airbus A380.Christian Charisius/picture alliance via Getty Images.Meanwhile, Emirates' existing A380 fleet is being retrofitted with a new interior that includes enhancements to each cabin and the addition of a premium economy class.Emirates A380 Premium EconomyEmiratesIn October 2021, All Nippon Airways (ANA) took delivery of its third and final A380 from Airbus's production line in Toulouse, France. The Japanese carrier initially planned to use the aircraft to fly solely between Tokyo and Honolulu, Hawaii, before the pandemic hit.Third and final ANA A380.AirbusSource: AirbusThose flights were rescheduled to start in January 2022, but the carrier has postponed the service until at least July 1, according to Cirium data. That could be further pushed back depending on the border-reopening status in Japan.AirbusSource: Cirium Diio MiWhile ANA has not flown its giant A380 since the pandemic on regularly scheduled flights, it has operated "flights to nowhere" around Japan.AirbusSource: Simple FlyingCompeting Asian carrier Singapore Airlines resumed A380 flights on November 4, 2021, after the launch of the "vaccinated travel lane" program that allowed inoculated visitors to skip quarantine upon arrival in Singapore.Mike Fuchslocher/ShutterstockThe first flight flew from Singapore to Kuala Lumpur, Malaysia. The 160-nautical-mile journey was among the shortest to ever be flown by the A380 in a scheduled capacity.Singapore Airlines Airbus A380Vytautas Kielaitis/ShutterstockSource: Cirium Diio MiSince then, Singapore has relaunched its A380 on several other routes, including two of the world's longest passenger flights from New York's John F. Kennedy International Airport and New Jersey's Newark Liberty International Airport.Taylor Rains/InsiderSee inside Singapore's A380 first class suite that features a full bed, private bathroom, and large leather armchairThe ultra-long-haul flights to Singapore push 19 hours. Because of the incredibly long journey, the carrier has created "wellness meals" that help passengers feel fuller, fresher, and more comfortable during the flight.Taylor Rains/InsiderSingapore Airlines just relaunched the world's second-longest flight which connects the country to NYC — see the 'wellness meals' the carrier serves onboard the 19-hour flightIn Europe, British Airways resumed flying the A380 on November 8, 2021, to Frankfurt, Germany, and Madrid from London as a means of getting flight crews reacclimated to the plane.A British Airways Airbus A380.Philip Pilosian / Shutterstock.comSource: Cirium Diio Mi, Simple FlyingAfter its initial European runs, British Airways expanded the A380 to overseas destinations, like Los Angeles, Boston, San Francisco, Dubai, and Johannesburg, South Africa.A British Airways Airbus A380.Thiago B Trevisan / Shutterstock.comSource: Cirium Diio MiAccording to data from Cirium, the airline will resume A380 flights to Dallas/Fort Worth on July 1, 2022, and up its seasonal service between London and Johannesburg to twice a day in October.EQRoy/Shutterstock.comSource: Cirium Diio MiBefore resuming service, the iconic red, white, and blue A380s sat in storage around Europe and as far as the Middle East. In Doha, Qatar, for example, three British A380s sat idle on a taxiway at Hamad International Airport.A British Airways Airbus A380.Thomas Pallini/InsiderHere's what living in the passenger terminal for 48 hours was like.Doha-based Qatar Airways was the second Middle Eastern carrier after Emirates to resume A380 operations after grounding the jets for over a year, flying the plane to Paris and London in December 2021.HasanZaidi/Shutterstock.comSource: Cirium Diio MiThe largest aircraft in Qatar's fleet is the only one to feature a true first-class cabin. Smaller aircraft only feature business-class seats.M101Studio/Shutterstock.comShortly after Qatar relaunched its A380, Australian airline Qantas announced the return of the double-decker in January 2022.A Qantas Airbus A380.Ryan Fletcher / Shutterstock.comSource: Cirium Diio MiAccording to Cirium, the plane flew between Sydney and Los Angles on January 11, followed by flights between Melbourne and Los Angeles on June 6 and Sydney and Singapore on June 21, though Cirium does not show any flights between Australia and London resuming this year.A Qantas Airbus A380.Felipe Sanchez / Shutterstock.comSource: Cirium Diio MiKorean Air was another carrier to quickly return the A380, resuming limited flights of the jet in September 2020 to destinations in Japan and China. Nearly two years later, service to the US finally restarted on Monday with a flight from Seoul to New York JFK.A Korean Air Airbus A380.Thiago B Trevisan / Shutterstock.comSource: Cirium Diio MiBut even as the carrier slowly returns the jet to its standard flying schedule, the A380's tenure in Korea is still set to expire in the next five years.Philip Pilosian/"The A380s will be leaving Korean Air's fleet within five years, and the Boeing 747-8i fleet will also follow suit within ten years," Walter Cho, Korean Air's chief executive officer, told FlightGlobal in August.A Korean Air Airbus A380.Thiago B Trevisan / Shutterstock.comSource: FlightGlobalIn 2021, German flag carrier Lufthansa shared Korean’s feelings towards the A380, and it was doubtful whether the airline would ever bring back the jet.A Lufthansa Airbus A380.Chittapon Kaewkiriya / Shutterstock.comSource: LufthansaLufthansa CEO Carsten Spohr said in a second-quarter 2021 earnings call that the "A380 obviously will not come back." However, the carrier reversed its pandemic-era decision on Monday, saying the beloved jet would return in summer 2023.Lufthansa's Airbus A380.Lufthansa.Source: Lufthansa, Seeking AlphaIn a press release, the carrier revealed that booming demand and delayed deliveries of other jets prompted the decision.A Lufthansa Airbus A380.Sundry Photography / Shutterstock.comSource: LufthansaIt is unknown how, when, or how many A380s will be reactivated, or which routes they will fly. However, Lufthansa did reveal it has 14 planes in "deep storage" in Spain in France, six of which have been sold and eight that remain available to the carrier.A Lufthansa Airbus A380 in storage.Santi Rodriguez / Shutterstock.comSource: LufthansaThere is one airline that never gave up on the A380, even during the worst of the pandemic — China Southern Airlines. The carrier only briefly grounded the jet from February 10 to March 24, 2020, per Cirium.A China Southern Airlines Airbus A380.StudioPortoSabbia / Shutterstock.comSource: Cirium Diio MiFrom Guangzhou, China, China Southern's A380 flew to global destinations such as Los Angeles, Sydney, Tokyo, Paris, London, and Amsterdam, Netherlands.Angel DiBilio/Shutterstock.comSource: Cirium Diio MiUnlike China Southern and Lufthansa, some carriers, including Air France, Malaysia Airlines, Thai Airways, and Etihad Airways, decided to stop flying the A380.An Etihad Airways Airbus A380.Fasttailwind/Shutterstock.comEtihad is ditching its largest and swankiest jets including the popular Airbus A380 and Boeing 777Air France quickly retired its A380 fleet in May 2020, early on in the pandemic, and now relies on more-efficient twin-engine aircraft, like the Boeing 787 Dreamliner, Boeing 777, and Airbus A350-900 XWB.Air France Airbus A380roibu/ShutterstockSource: ForbesDespite some retirements, the pandemic hasn't yet killed the beloved A380 jet, even if it has sped up the aircraft's decline in popularity. Some airlines, like their passengers, still do have affection for the iconic plane and aren't ready to part with it just yet.Lufthansa's Airbus A380.Lufthansa.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJun 28th, 2022

UnitedHealth stock"s rally gives more than 90-point boost to the Dow

Shares of UnitedHealth Group Inc. surged 2.8% in afternoon trading Monday, enough to pace the Dow Jones Industrial Average's gainers, and to put them on track for a two-month high. UnitedHealth's stock has now run up 12.8% over the past five days. The health care services provider's stock price gain of $14.07 would add about 93 points to the Dow's price, while the Dow was up just 2 points, or less than 0.1%, but with 17 of 30 components losing ground. Providing the next biggest boost to the price-weighted index was Chevron Corp.'s stock , which rose $3.39, or 2.3%, to add about 22 points to the Dow's price. Meanwhile, the biggest drags were shares of Salesforce Inc. and Boeing Co. , which combined shaved about 46 points off the Dow.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit for more information on this news......»»

Category: topSource: marketwatchJun 27th, 2022

Park Hotels (PK) Sells Seattle Hotel & San Diego JV Stake

Park Hotels & Resorts' (PK) dispositions come as part of its aggressive capital recycling program, aimed at lowering net leverage and positioning the portfolio for sustainable long-term growth. Park Hotels & Resorts Inc. PK announced the completion of the sale of the 195-room Homewood Suites by Hilton Seattle Convention Center Pike Street in Seattle, WA. Also, the lodging REIT accomplished the sale of its 25% joint venture stake in the 1,190-room Hilton San Diego Bayfront in San Diego, CA.The two transactions resulted in combined gross proceeds of $237 million. It includes Park Hotels’ $55 million pro-rata share of secured debt in Hilton San Diego Bayfront. PK will utilize the sale proceeds for general corporate needs. The combined sale price marks a 6.3% capitalization rate on the 2019 net operating income.The moves come as part of Park Hotels’ capital recycling program and so far in the year, the company has sold interests in four hotels for combined gross proceeds of roughly $260 million. Currently, Park Hotels also has one additional non-core hotel under contract for $9.4 million. In May, the company sold the 211-room Hilton Chicago/Oakbrook Suites for gross proceeds of $10.3 million.These efforts keep PK on track to achieve its target of $200 to $300 million of asset sales in 2022. The strategic capital recycle program is aimed at lowering net leverage and positioning the portfolio for sustainable long-term growth.After suffering a severe impact of the onset of the pandemic with travel cancellations and social distancing requirements, the lodging industry fundamentals are now experiencing a rebound.Earlier in June, Park Hotels’ Chairman and CEO, Thomas J. Baltimore, Jr., noted that “Leisure demand remains robust in our Hawaii, Florida and Puerto Rico markets, while business transient and group demand trends continue to accelerate across our urban portfolio, with the pace of improvement expected to continue over the balance of the year.”Shares of Park Hotels have declined 29.4% compared with the 15.2% fall of the industry in the past three months. At present, PK carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Image Source: Zacks Investment ResearchStocks to ConsiderSome key picks from the REIT sector include Extra Space Storage Inc. EXR and OUTFRONT Media OUT.The Zacks Consensus Estimate for Extra Space Storage’s 2022 funds from operations (FFO) per share has moved 1.6% upward in the past month to $8.25. EXR presently carries a Zacks Rank of 2 (Buy).The Zacks Consensus Estimate for OUTFRONT Media’s ongoing year’s FFO per share has been raised 7.7% over the past two months to $2.09. OUT sports a Zacks Rank #1 currently.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>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 Extra Space Storage Inc (EXR): Free Stock Analysis Report OUTFRONT Media Inc. (OUT): Free Stock Analysis Report Park Hotels & Resorts Inc. (PK): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 24th, 2022

Sky-High Rental Prices Surpass Pre-COVID Levels by More than 25%

The median rental price hit its latest new high of $1,849 per month in May, representing a 26.6% increase since 2019 before the pandemic began, according to the latest® Monthly Rental Report, released this week. While May marked the 10th straight month of double-digit annual growth in national rents, the increase was the smallest… The post Sky-High Rental Prices Surpass Pre-COVID Levels by More than 25% appeared first on RISMedia. The median rental price hit its latest new high of $1,849 per month in May, representing a 26.6% increase since 2019 before the pandemic began, according to the latest® Monthly Rental Report, released this week. While May marked the 10th straight month of double-digit annual growth in national rents, the increase was the smallest since September 2021, offering renters a glimpse of a light at the end of the tunnel,® said. More key findings: May 2022 rental metrics—national Unit Size Median Rent Change over May 2021 Change over May 2020 Overall $1,849 15.5% 23.2% Studio $1,530 16.9% 18.8% 1-bed $1,708 15.2% 22.5% 2-bed $2,076 14.8% 25.5%   National rents maintain double-digit growth, but cool slightly from 2021’s record pace For Americans looking for available rental units within their budgets, May trends offer bittersweet news. On one hand, national rents posted the smallest year-over-year gain (+15.5%) since September 2021, moderating from their January peak (+17.3%) for the fourth consecutive month. As a result, rents took a step back from their previous projection of surpassing $2,000 by as early as this summer. In fact, if rent growth continues cooling, typical asking rents may not reach that milestone until next year. Additionally, with the for-sale housing supply recovery forecasted to accelerate in the second half of the year, a rise in first-time buying opportunities could take even more pressure off rental demand and prices. Still, rental affordability remained a significant challenge for many renters across the country in May. The U.S. median rental price continued its record-breaking streak, hitting a new high ($1,849) for the 15th month in a row and reaching 26.6% higher than in May 2019 before the onset of COVID. Additionally, all unit sizes posted double-digit rental price gains year-over-year: studios, up 16.9% to $1,530; one-bedrooms, up 15.2% to $1,708; and two-bedrooms, up 14.8% to $2,076. Rising inflation is further compounding the strain on households’ monthly budgets, as higher costs of rents and regular expenses continue to outpace income growth. Renters find relatively more affordable options where rental vacancy rates are lowest In May, rents grew on a year-over-year basis in all 50 of the largest U.S. metros and at a faster pace than the national rate in nearly half (21) of these markets. The biggest annual rental price gains were registered in Miami (+45.8%), Orlando, Fla. (+28.4%), Providence, R.I. (+23.8%), San Diego (+22.7%) and Tampa, Fla. (+22.4%). What the data means: A key factor driving the ongoing rent surge is a lack of supply, as rental vacancy rates, which were already trending lower, have taken a sharp dive during the pandemic,® says. These trends are magnified in the biggest cities that tend to attract younger residents, many of whom are in the early stages of their careers and looking for the flexibility in their living situations. Renting may also be a more desirable alternative to buying in these areas, where real estate has historically come at a premium. According to U.S. Census Bureau data from the first quarter of 2022, rental vacancy rates were lower inside (5.7%) versus outside (6.7%) the largest metro areas. “There’s no question that renters are facing sky high prices. And with rising inflation reflecting price jumps for both rents and everyday expenses, many renters are feeling the strain on their finances,” said® Chief Economist Danielle Hale. “Still, our May data suggests that the rent surge is beginning to lose some steam, in part because incomes can’t keep up, even in the strong job market. Although rent growth remains historically high, the rate has been gradually cooling since January, pulling back from 2021’s feverish pace. In a bit of good news for renters, the deceleration picked up in May which means if these trends continue, last month’s prediction of rents surpassing $2,000 sometime this summer is going to take longer to materialize.” The post Sky-High Rental Prices Surpass Pre-COVID Levels by More than 25% appeared first on RISMedia......»»

Category: realestateSource: rismediaJun 23rd, 2022

Worthington Reports Fourth Quarter Fiscal 2022 Results

COLUMBUS, Ohio, June 22, 2022 (GLOBE NEWSWIRE) -- Worthington Industries, Inc. (NYSE:WOR) today reported net sales of $1.5 billion and net earnings of $80.3 million, or $1.61 per diluted share, for its fiscal 2022 fourth quarter ended May 31, 2022. In the fourth quarter of fiscal 2021, the Company reported net sales of $978.3 million and net earnings of $113.6 million, or $2.15 per diluted share. Results in both the current and prior year quarter were impacted by certain unique items, as summarized in the table below. (U.S. dollars in millions, except per share amounts)     4Q 2022     4Q 2021       After-Tax     Per Share     After-Tax     Per Share   Net earnings   $ 80.3     $ 1.61     $ 113.6     $ 2.15   Impairment and restructuring (gains) charges     (1.8 )     (0.03 )     10.9       0.20   Incremental expenses related to Nikola gains     -       -       (1.1 )     (0.02 ) Adjusted net earnings   $ 78.5     $ 1.58     $ 123.4     $ 2.33                                     Financial highlights for the current and comparative periods are as follows: (U.S. dollars in millions, except per share amounts)   4Q 2022     4Q 2021     12M 2022     12M 2021   Net sales $ 1,520.3     $ 978.3     $ 5,242.2     $ 3,171.4   Operating income   65.4       110.5       329.3       167.5   Equity income   53.0       42.4       213.6       123.3   Net earnings   80.3       113.6       399.3       741.5   Earnings per diluted share $ 1.61     $ 2.15     $ 7.44     $ 13.42                                   "We finished our 2022 fiscal year with strong results in the fourth quarter and delivered record earnings per share for the full year," said Andy Rose, President and CEO.  "Steel Processing was negatively impacted by inventory holding losses in the fourth quarter but our Building Products and Consumer Products segments both continued to perform exceptionally well, as our investments in new product development and production capacity are positively impacting our results.  I'm very pleased with the way our teams continue to execute in a challenging environment, and I want to thank all our employees for their continued hard work and commitment to our customers." Consolidated Quarterly Results Net sales for the fourth quarter of fiscal 2022 were $1.5 billion compared to $978.3 million, an increase of $542.0 million, or 55%, over the comparable quarter in the prior year. The increase was driven by higher average selling prices across all segments and contributions from the acquisitions of Tempel Steel Company and Shiloh Industries' U.S. BlankLight® business in the current fiscal year. Gross margin decreased $58.4 million from the prior year quarter to $167.7 million, as improvements in both the Consumer Products and Building Products segments were more than offset by lower margin contributions from Steel Processing. Margins in Steel Processing were negatively impacted by an estimated $92.8 million unfavorable swing related to inventory holding losses in the current quarter compared to inventory holding gains in the prior year quarter. Operating income for the current quarter was $65.4 million, down $45.1 million from the prior year quarter. Excluding restructuring items in both quarters and the impact of the Nikola-related expense adjustment in the prior year quarter, operating income was down $63.1 million from the prior year quarter on the combined impact of lower gross margin and higher SG&A expense, up $4.7 million over the prior year quarter primarily due to the impact of acquisitions. Interest expense was $8.2 million in the current quarter, up $0.5 million over the prior year quarter due to the impact of higher average debt levels associated with short-term borrowings. The Company generated equity income of $53.0 million in the current quarter and received cash distributions of $22.6 million from unconsolidated joint ventures during the quarter. The $10.7 million increase in equity income in the current quarter was driven primarily by higher equity earnings at ClarkDietrich, partially offset by a decline in equity earnings at WAVE. Income tax expense was $25.0 million in the current quarter compared to $27.4 million in the prior year quarter. The decrease was driven by lower pre-tax earnings, partially offset by a discrete tax benefit realized in connection with the sale of the Company's liquified petroleum gas (LPG) fuel storage business in Poland in the prior year quarter. Tax expense in the current quarter reflects an annual effective rate of 23.3% compared to 19.6% for the prior year quarter. Balance Sheet At quarter-end, total debt of $744.6 million was up $34.1 million from May 31, 2021. The Company had $34.5 million of cash at quarter end, a decrease of $605.8 million from May 31, 2021, primarily due to acquisitions and an increase in working capital associated with higher average steel prices. Quarterly Segment Results Steel Processing's net sales totaled $1.1 billion, up $464.6 million, over the prior year quarter. The increase in net sales was driven by higher average selling prices and, to a lesser extent, the impact of acquisitions. Adjusted EBIT was down $81.3 million from the prior year quarter to $16.5 million, as the favorable impact of acquisitions and higher selling prices was more than offset by inventory holding losses, estimated to be $42.3 million in the current quarter compared to estimated inventory holding gains of $50.5 million in the prior year quarter. The mix of direct versus toll tons processed was 56% to 44% in the current quarter, compared to 48% to 52% in the prior year quarter. Consumer Products' net sales totaled $186.2 million, up 18%, or $28.7 million, over the prior year quarter on higher selling prices, partially offset by an unfavorable shift in product mix. Adjusted EBIT totaled $29.5 million in the current quarter, an increase of $10.5 million over the prior year quarter driven primarily by the favorable impact of higher selling prices. Building Products' net sales totaled $172.9 million, up 40%, or $49.2 million, over the prior year quarter on higher selling prices and an improved product mix. Adjusted EBIT increased $22.4 million over the prior year quarter to $63.6 million, on higher contributions of both operating and equity earnings, up $11.5 million and $10.8 million respectively, on the impact of higher selling prices, an increase in equity earnings at ClarkDietrich and favorable product mix. Sustainable Energy Solutions' net sales totaled $41.3 million, up 1%, or $0.4 million, over the comparable prior year quarter on higher selling prices, partially offset by the May 31, 2021 divestiture of the LPG business in Poland. Adjusted EBIT reflected a loss of $1.7 million compared to a profit of $3.9 million in the prior year quarter, driven by unfavorable product mix and increased costs. Adjusted EBIT in the prior year quarter excludes a $10.3 million loss on the sale of the LPG business. Recent Developments During the fourth quarter of fiscal 2022, the Company repurchased a total of 1,000,000 of its common shares for $52.4 million, at an average purchase price of $52.41.   On May 19, 2022, the Company established a revolving trade accounts receivable securitization facility allowing it to borrow up to $175.0 million. The facility further enhances the Company's liquidity position, providing low-cost incremental borrowing capacity.   On June 2, 2022, the Company acquired Level5® Tools, LLC, a leading provider of drywall tools and related accessories. The purchase price was approximately $55.0 million, subject to closing adjustments, with a potential earn out of up to $25.0 million based on performance through 2024.   On June 22, 2022, Worthington's Board of Directors declared a quarterly dividend of $0.31 per share payable on September 29, 2022 to shareholders of record on September 15, 2022, an 11% increase or $0.03 per share. Outlook "We are well positioned heading into our new fiscal year with solid business strategies to drive growth through transformation, innovation, and M&A," Rose said.  "While the business environment continues to be challenging and there is some level of economic uncertainty, our teams are performing at a high level, and we remain optimistic about demand in our key end markets and our ability to execute effectively going forward."   Conference Call Worthington will review fiscal 2022 fourth quarter results during its quarterly conference call on June 23, 2022, at 8:30 a.m., Eastern Time. Details regarding the conference call can be found on the Company website at About Worthington Industries Worthington Industries (NYSE:WOR) is a leading industrial manufacturing company pursuing its vision to be the transformative partner to its customers, a positive force for its communities and earn exceptional returns for its shareholders. For over six decades, the Company has been delivering innovative solutions to customers spanning industries such as automotive, energy, retail and construction. Worthington is North America's premier value-added steel processor and producer of laser welded solutions and electrical steel laminations that provide lightweighting, safety critical and emission reducing components to the mobility market. Through on-board fueling systems and gas containment solutions, Worthington serves the growing global hydrogen ecosystem. The Company's focus on innovation and manufacturing expertise extends to market-leading consumer products in tools, outdoor living and celebrations categories, sold under brand names, Coleman®, Bernzomatic®, Balloon Time®, Mag Torch®, Well-X-Trol®, General®, Garden-Weasel®, Pactool International® and Hawkeye™; as well as market leading building products, including water systems, heating & cooling solutions, architectural and acoustical grid ceilings and metal framing and accessories. Headquartered in Columbus, Ohio, Worthington operates 58 facilities in 16 states and nine countries, sells into over 90 countries and employs approximately 9,500 people. Founded in 1955, the Company follows a people-first philosophy with earning money for its shareholders as its first corporate goal. Relentlessly finding new ways to drive progress and transform, Worthington is committed to providing better solutions for customers and bettering the communities where it operates by reducing waste, supporting community-based non-profits and developing the next generations of makers. Safe Harbor Statement The Company wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements by the Company relating to the ever-changing effects of the novel coronavirus ("COVID-19") pandemic and the various responses of governmental and nongovernmental authorities thereto (such as fiscal stimulus packages, quarantines, shut downs and other restrictions on travel and commercial, social or other activities) on economies (local, national and international) and markets, and on our customers, counterparties, employees and third-party service providers; future or expected cash positions, liquidity and ability to access financial markets and capital; outlook, strategy or business plans; future or expected growth, growth potential, forward momentum, performance, competitive position, sales, volumes, cash flows, earnings, margins, balance sheet strengths, debt, financial condition or other financial measures; pricing trends for raw materials and finished goods and the impact of pricing changes; the ability to improve or maintain margins; expected demand or demand trends for the Company or its markets; additions to product lines and opportunities to participate in new markets; expected benefits from Transformation and innovation efforts; the ability to improve performance and competitive position at the Company's operations; anticipated working capital needs, capital expenditures and asset sales; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain and the results thereof; projected profitability potential; the ability to make acquisitions and the projected timing, results, benefits, costs, charges and expenditures related to acquisitions, joint ventures, headcount reductions and facility dispositions, shutdowns and consolidations; projected capacity and the alignment of operations with demand; the ability to operate profitably and generate cash in down markets; the ability to capture and maintain market share and to develop or take advantage of future opportunities, customer initiatives, new businesses, new products and new markets; expectations for Company and customer inventories, jobs and orders; expectations for the economy and markets or improvements therein; expectations for generating improving and sustainable earnings, earnings potential, margins or shareholder value; effects of judicial rulings; and other non-historical matters constitute "forward-looking statements" within the meaning of the Act. Because they are based on beliefs, estimates and assumptions, forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected. Any number of factors could affect actual results, including, without limitation, the risks, uncertainties and impacts related to the COVID-19 pandemic – the duration, extent and severity of which is impossible to predict, including the possibility of future resurgence in the spread of COVID-19 or variants thereof – and the availability, effectiveness and acceptance of vaccines, and other actual or potential public health emergencies and actions taken by governmental authorities or others in connection therewith; the effect of national, regional and global economic conditions generally and within major product markets, including significant economic disruptions from COVID-19, the actions taken in connection therewith and the implementation of related fiscal stimulus packages; the effect of conditions in national and worldwide financial markets, including inflation and increases in interest rates, and with respect to the ability of financial institutions to provide capital; the impact of tariffs, the adoption of trade restrictions affecting the Company's products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; changing oil prices and/or supply; product demand and pricing; changes in product mix, product substitution and market acceptance of the Company's products; volatility or fluctuations in the pricing, quality or availability of raw materials (particularly steel), supplies, transportation, utilities, labor and other items required by operations (especially in light of the COVID-19 pandemic and Russia's invasion of Ukraine); the outcome of adverse claims experience with respect to workers' compensation, product recalls or product liability, casualty events or other matters; effects of facility closures and the consolidation of operations; the effect of financial difficulties, consolidation and other changes within the steel, automotive (especially in light of the semi-conductor shortages), construction and other industries in which the Company participates; failure to maintain appropriate levels of inventories; financial difficulties (including bankruptcy filings) of original equipment manufacturers, end-users and customers, suppliers, joint venture partners and others with whom the Company does business; the ability to realize targeted expense reductions from headcount reductions, facility closures and other cost reduction efforts; the ability to realize cost savings and operational, sales and sourcing improvements and efficiencies, and other expected benefits from Transformation initiatives, on a timely basis; the overall success of, and the ability to integrate, newly-acquired businesses and joint ventures, maintain and develop their customers, and achieve synergies and other expected benefits and cost savings therefrom; capacity levels and efficiencies, within facilities, within major product markets and within the industries in which the Company participates as a whole; the effect of disruption in the business of suppliers, customers, facilities and shipping operations due to adverse weather, casualty events, equipment breakdowns, labor shortages (especially in light of the COVID-19 pandemic), interruption in utility services, civil unrest, international conflicts (especially in light of Russia's invasion of Ukraine), terrorist activities or other causes; changes in customer demand, inventories, spending patterns, product choices, and supplier choices; risks associated with doing business internationally, including economic, political and social instability (especially in light of Russia's invasion of Ukraine), foreign currency exchange rate exposure and the acceptance of the Company's products in global markets; the ability to improve and maintain processes and business practices to keep pace with the economic, competitive and technological environment; the effect of inflation and interest rate increases, which may negatively impact the Company's operations and financial results; deviation of actual results from estimates and/or assumptions used by the Company in the application of its significant accounting policies; the level of imports and import prices in the Company's markets; the impact of environmental laws and regulations or the actions of the United States Environmental Protection Agency or similar regulators which increase costs or limit the Company's ability to use or sell certain products; the impact of increasing environmental, greenhouse gas emission and sustainability regulations or considerations or; the impact of judicial rulings and governmental regulations, both in the United States and abroad, including those adopted by the United States Securities and Exchange Commission and other governmental agencies as contemplated by the Coronavirus Aid, Relief and Economic Security (CARES) Act, the Consolidated Appropriations Act, 2021, the American Rescue Act of 2021, and the Dodd-Frank Wall Street Reform and the Consumer Protection Act of 2010; the effect of healthcare laws in the United States and potential changes for such laws, especially in light of the COVID-19 pandemic which may increase the Company's healthcare and other costs and negatively impact the Company's operations and financial results; the effects of tax laws in the United States and potential changes for such laws, which may increase the Company's costs and negatively impact the Company's operations and financial results; cyber security risks; the effects of privacy and information security laws and standards; and other risks described from time to time in the filings of Worthington Industries, Inc. with the United States Securities and Exchange Commission, including those described in "Part I – Item 1A. – Risk Factors" of the Annual Report on Form 10-K of Worthington Industries, Inc. for the fiscal year ended May 31, 2021. Contacts:SONYA L. HIGGINBOTHAMVP, CORPORATE COMMUNICATIONS AND BRAND MANAGEMENT614.438.7391 | MARCUS A. ROGIERTREASURER AND INVESTOR RELATIONS OFFICER614.840.4663 | 200 Old Wilson Bridge Rd. | Columbus, Ohio WORTHINGTON INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts)   Three Months Ended     Twelve Months Ended     May 31,     May 31,     2022     2021     2022     2021   Net sales $ 1,520,305     $ 978,319     $ 5,242,219     $ 3,171,429   Cost of goods sold   1,352,582       752,171       4,527,403       2,532,351   Gross margin   167,723       226,148       714,816       639,078   Selling, general and administrative expense   104,642       99,925       399,568       351,145   Impairment of long-lived assets   -       -       3,076       13,739   Restructuring and other (income) expense, net   (2,314 )     18,441       (17,096 )     56,097   Incremental expenses related to Nikola gains   -       (2,676 )     -       50,624   Operating income   65,395       110,458       329,268       167,473   Other income (expense):                       Miscellaneous income, net   651       797       2,714       2,163   Interest expense   (8,167 )     (7,650 )     (31,337 )     (30,346 ) Equity in net income of unconsolidated affiliates   53,041       42,386       213,641       123,325   Gains on investment in Nikola   -       -       -       655,102   Earnings before income taxes   110,920       145,991       514,286       917,717   Income tax expense   24,963       27,449       115,022       176,267   Net earnings   85,957       118,542       399,264       741,450   Net earnings attributable to noncontrolling interests   5,705       4,987       19,878       17,655   Net earnings attributable to controlling interests $ 80,252     $ 113,555     $ 379,386     $ 723,795                           Basic                       Weighted average common shares outstanding   48,780       51,587       49,940       52,701   Earnings per share attributable to controlling interest $ 1.65     $ 2.20     $ 7.60     $ 13.73                           Diluted                       Weighted average common shares outstanding   49,701       52,862       50,993       53,917   Earnings per share attributable to controlling interest $ 1.61     $ 2.15     $ 7.44     $ 13.42                                                   Common shares outstanding at end of period   48,380       51,330       48,380       51,330                           Cash dividends declared per share $ 0.28     $ 0.28     $ 1.12     $ 1.03                                   CONSOLIDATED BALANCE SHEETS WORTHINGTON INDUSTRIES, INC. (In thousands)   May 31,     2022     2021   Assets           Current assets:           Cash and cash equivalents $ 34,485     $ 640,311   Receivables, less allowances of $1,292 and $608 at May 31, 2022           and May 31, 2021, respectively   857,493       639,964   Inventories:           Raw materials   323,609       266,208   Work in process   255,019       183,413   Finished products   180,512       115,133   Total inventories   759,140       564,754   Income taxes receivable   20,556       1,958   Assets held for sale   20,318       51,956   Prepaid expenses and other current assets   93,661       69,049   Total current assets   1,785,653       1,967,992   Investments in unconsolidated affiliates   327,381       233,126   Operating lease assets   98,769       35,101   Goodwill   401,469       351,056   Other intangible assets, net of accumulated amortization of $93,973 and           $80,513 at May 31, 2022 and May 31, 2021, respectively   299,017       240,387   Other assets   34,394       30,566   Property, plant and equipment:           Land   51,483       21,744   Buildings and improvements   303,269       271,196   Machinery and equipment   1,196,806       1,046,065   Construction in progress   59,363       53,903   Total property, plant and equipment   1,610,921       1,392,908   Less: accumulated depreciation   914,581       877,891   Total property, plant and equipment, net   696,340       515,017   Total assets $ 3,643,023     $ 3,373,245               Liabilities and equity           Current liabilities:           Accounts payable $ 668,438     $ 567,392   Short-term borrowings   47,997       -   Accrued compensation, contributions to employee benefit plans and related taxes   117,530       137,698   Dividends payable   15,988       16,536  .....»»

Category: earningsSource: benzingaJun 22nd, 2022